The Telangana State Authority for Advance Ruling (AAR) has held that 18% GST applicable on monthly collections by Resident Welfare Association (RWA) exceeds Rs.7500 per member.
The applicant, M/s. Jayabheri Orange County Owners Association is a Resident Welfare Association (RWA) collecting monthly maintenance charges, certain annual fees by a name sinking fund, and charges for electricity used in the common area. They approached AAR FOR clarification as to whether these collections are liable to tax under GST.
The Authority observed that Serial No. 77 of Notification No. 12/2017 as amended by Notification No. 02/2018, an unincorporated body or a non-profit entity to its members is exempt up to an amount of Rs. 7500 per member for sourcing goods or services from a 3rd person for the common use of its members in a housing society or a residential complex. Therefore, where the aggregate turnover of a Residents Welfare Association (RWA) exceeds Rs.20 lakhs in a financial year and the amount collected for maintenance per member exceeds Rs.7500/- then the entire amount is chargeable to GST at the rate of 18%.
The Authority further observed that even if the annual turnover of the RWA is greater than Rs.20 lakhs but the monthly maintenance charged per person is Rs. 7500/- or less, then such RWA need not pay tax on the amounts so collected.
The Coram of Mr. B. Raghu Kiran, IRS, (Central Tax), and Mr. S.V. Kasi Visweswara Rao, (State Tax) have held that “any amounts collected periodically along with the monthly maintenance charges are covered under Entry 77 of Notification No. 12/2017. Therefore, they are taxable if the total amount collected by the RWA, by whatever name i.e., monthly maintenance or sinking fund, etc., exceeds Rs.7500/-. Therefore, the total amount collected in July or august month by RWA from the members i.e., the monthly maintenance charge plus sinking fund amount is liable to tax if it exceeds Rs.7500/-. Nevertheless, GST is not leviable on electricity and water charges collected from residents”.
Mr. Ayyappa Kandula, CA appeared on behalf of the applicant.
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