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GST law does not require registration of those entities whose aggregate turnover is below the prescribed threshold limit. Further, the exemption notification contains a list of services that are exempt from GST subject to certain conditions, restrictions and limits relating to individual supplies.
This could create confusion regarding the ultimate applicability of GST concerning specific supplies which is why the government issues clarifications in this regard from time to time.
In this article, we will be focusing on a circular issued to clarify specific issues regarding the applicability of GST on maintenance charges levied by the Residential Welfare Association (RWA).
Yes, maintenance charges paid by residents to the Resident Welfare Association are exempt up to Rs.7,500. In case the amount charged exceeds Rs.7,500 per month per member, GST is chargeable on the entire amount charged.
As per the Madras High Court order in the case of TVH Lumbini Square Owners Association in July 2021, the GST must be charged on the amount collected over and above Rs.7,500 and not the entire amount. It must be seen how the government takes this matter to the apex court.
No, the RWA is not required to take registration and charge GST since its aggregate turnover does not exceed Rs.20 lakh (or Rs.40 lakh or Rs.10 lakh, as applicable) in the financial year even if the amount of maintenance charges exceeds Rs.7,500 per month per member.
Further, the registration and charging of GST would not be required where the aggregate turnover exceeded Rs.20 lakh in a financial year, but the monthly maintenance charges were up to Rs.7,500 per member.
The above can be summarised in the following table:
|Sl. No.||Is the aggregate turnover Rs.20 lakh or more in the financial year?||Are the maintenance charges per month per member more than Rs.7,500?||Is GST registration required?||Is GST chargeable for any goods/services supplied by the RWA?|
As mentioned earlier, where the maintenance charges exceed Rs.7,500 per month per member, GST is chargeable on the whole amount. For example, if the maintenance charge is Rs.9,000, GST is chargeable on the entire amount of Rs.9,000. Note that it is assumed that the aggregate turnover of the RWA is Rs.20 lakh or more.
Yes, where the amount charged for such supplies is more than Rs.7,500 per month per member, the ITC would mainly be available on the following:
In the general business sense, the limit of Rs.7,500 per month per member shall apply separately to each apartment owner and not per member living in the apartment. It is because the person is considered a member of the RWA for each apartment separately.
Yes, the exemption is available even when flats are occupied for commercial use since they qualify as members of the RWA. How the members use the apartments is not relevant.
Thus, it can be concluded that GST is chargeable only where both cases are satisfied: