DECISIONS TAKEN BY THE GST COUNCIL IN ITS 22nd MEETING HELD ON 6.10.2017
The Goods and Services Tax Act, 2017 came into force
with effect from 1.7.2017 in India.
At present housing society or apartment associations
is a situation popular in India with a group of house owners or residents
within a residential complex, usually one consisting of buildings that each
have flats.
A housing society’s apartments or premises are formed
as per relevant laws for smooth functioning of utilities and other amenities
provided to them such as street lighting, lift maintenance, common area
cleaning, water facilities, security salary and staff salary etc and removal of
garbage,
The Managing Committee takes care of the affairs of
the Housing Society like apartment of service providers, maintenance of Society
premises, solving member’s grievances, maintenance of books of accounts and
taking care of safety and security.
The housing society must be formally registered with
registrar of co-operative societies or Registration Department. In India each state has its own rules in this
regard.
Each building in same premises may have separate
housing society or one. For example, individual house owners will form a
housing society and flat owners in the apartments will form an “Association of
Apartments Owners” as per the Apartment Ownership Acts in various states.
The Resident Welfare Associations comes under the
category of Service Providers under the Goods and Services Tax Act, 2017. When the Goods and Services Tax Act, 2017
came into force on 1.7.2017, press reports revealed that services provided by a
Residents Welfare Association (RWA) would become expensive under the GST.
The Finance Ministry in a statement clarified that A Resident
Welfare Association shall be required to pay GST on monthly subscription or
contributions charged (in the name of maintenance and other charges) from its members
if such subscription is more than Rs. 5000.00 per member and the annual
turnover of Resident Welfare Association by way of supply of services and goods
is also Rs. 20 Lakhs or more.
As per the above clarification if subscription/contribution
charged from its members above Rs. 5000.00 per month from each member of the Association will
have to pay service tax at the applicable rates.
Similarly the annual turnover of Resident Welfare
Association by supply of services and goods if exceeds Rs. 20 Lakhs the
Association has to pay service tax by collecting the same from its members. In
other words if the monthly subscription of all members exceeds Rs.1,66,666.66,
the Association has to pay service tax under Goods and Services Tax Regime.
The Press release issued by the Government of India is given below for ready reference
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Press Information Bureau
Government of India
Ministry of Finance
13-July-2017 15:48 IST
Services provided by
the Housing Society
Resident Welfare Association (RWA) not to become expensive
under
GST; There is
no change made to services
provided by the Housing Society
(RWA) to its members in
the GST regime.
There
are
some
press
reports
that services provided by a Housing Society [Resident
Welfare
Association (RWA)]
will become expensive under GST. These are completely unsubstantiated.
It may be mentioned that 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 upto 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.
RWA shall be required to pay
GST on monthly subscription/contribution charged from its members if such
subscription is more than Rs. 5000 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. ITC of
Central Excise and VAT paid on goods
and capital goods was not available
in the pre-GST period and
these were a cost to the RWA.
Thus, there is no change made to services provided by the Housing Society (RWA) to its members in the GST era
http://pib.nic.in/newsite/PrintRelease.aspx?relid=167386
To view the latest article effective from 25.1.2018 click the link given below:
https://abhivirthi.blogspot.com/2018/01/rwa-subscriptioncontribution-amount.html
To view the latest article effective from 25.1.2018 click the link given below:
https://abhivirthi.blogspot.com/2018/01/rwa-subscriptioncontribution-amount.html
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