18% GST on flat owners on monthly RWA fee of over Rs 7,500: Govt

Finance Ministry circular clarifies how residents' associations should charge GST.

Flat owners will pay 18 per cent GST if their monthly maintenance fees to resident welfare associations (RWA) is more than Rs 7,500, said the Finance Ministry on Monday.

RWAs have to collect GST on fees charged from members, if such payment is more than Rs 7,500 per flat per month and the annual turnover of RWA by way of supply of services and goods exceeds Rs 20 lakh.

The Finance Ministry in a circular clarified an exemption from GST is available only if charges do not exceed Rs 7,500 per month per RWA member.

"In case the charges exceed Rs 7,500 per month per member, the entire amount is taxable. For example, if the maintenance charges are Rs 9,000 per month per member, GST @18 per cent shall be payable on the entire amount of Rs 9,000 and not on (Rs 9,000-Rs 7,500) = Rs 1,500," it said.

On how the tax liability would be calculated for a person who owns two or more flats in the housing society or residential complex, the Ministry said in such cases the ceiling of Rs 7500 per month per member shall be applied separately for each residential apartment owned by him.

"For example, if a person owns two residential apartments in a residential complex and pays Rs 15,000 per month as maintenance charges towards maintenance of each apartment to the RWA (Rs. 7500/- per month in respect of each residential apartment), the exemption from GST shall be available to each apartment," it said.

The Ministry further clarified that RWAs are entitled to take input tax credit (ITC) of Goods and Services Tax (GST) 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.