The 25th Goods and Services Tax (GST) Council meeting held on 18th January 2018 has decided to enhance the limit of the contribution made by members of a Resident Welfare Association for the purpose of exemption from GST.
Currently, supply of service by RWA (unincorporated body or a registered non- profit entity) to its own members by way of reimbursement of charges or share of contribution up to an amount of five thousand rupees per month per member for providing services and goods for the common use of its members in a housing society or a residential complex are exempt from GST. Further, if the aggregate turnover of such RWA is up to Rs.20 Lakh in a financial year, then such supplies would be exempted from GST even if charges per member are more than Rs. five thousand.
Several requests were received from stakeholders to enhance the contribution limit.
after the GST Rollout, the Finance Minister Arun Jaitley had clarified that Services provided by Housing Society Residents Welfare Association not to become expensive under the new tax regime.
The Council has recommended that the limit may be enhanced to Rs.7500/- per month per member. As a result, RWAs shall be required to pay GST on monthly subscription/contribution charged from its members if such subscription is more than Rs. 7500 per member and the annual turnover of RWA by way of supplying of services and goods is also Rs. 20 lakhs or more. Under GST, the tax burden on RWAs will be lower for the reason that they would now be entitled to ITC in respect of taxes paid by them on capital goods (generators, water pumps, lawn furniture etc.), goods (taps, pipes, other sanitary/hardware fillings etc.) and input services such as repair and maintenance services.
Earlier, input tax credit of Central Excise and Value Added Tax paid on goods and capital goods were not available in the pre-GST period and these were a cost to the Resident Welfare Association.
