RWA (resident welfare association) is required to collect GST on monthly contribution or subscription charged from its members if
- The annual turnover of RWA exceeds the threshold limit of Rs. 20 lakhs by supply of goods or services and
- If the monthly subscription charges exceeds Rs. 7,500 per flat per month.
Earlier, the maintenance charges in excess of ₹5,000 attracted GST and the limit was revised in excess of ₹7,500 effective from January 25, 2018.
However, the exemption from GST on maintenance charges charged by RWA from members is available if such charges do not exceed Rs. 7,500 per month per member.
In case the charges exceed Rs. 7,500 per month per member, the entire amount is taxable.
The GST rate applicable on maintenance charges is @18%.
For example, if the maintenance charges are Rs. 10,000 per month per member, then GST @18% shall be applicable on entire amount i.e. 18% on Rs. 10,000 not on the difference i.e. Rs. 1,500 (Rs.10,000 – Rs. 7,500).
Another issue arises if a person owns two or more flats on housing society or residential complex, in such case the limit of Rs. 7,500 per month per member shall be taken separately for each residential complex.
RWAs are entitled to take Input tax credit (ITC) of Goods and service tax paid by them on capital goods like generators, furniture, on goods like pipes, sanitary goods and on input services like repair and maintenance services.