GST Not Payable On Monthly Collection Not Exceeding Rs.7500 Per Member Of RWA: AAR

The applicant, M/s. Jayabheri Orange County Owners Association, is a Resident Welfare Association (RWA) collecting monthly maintenance charges, a certain annual fee by name sinking fund, and charges for electricity used in common areas.

The applicant has sought an advance ruling on the issue of GST rate applicable on monthly collection not exceeding Rs.7500 per member as the total collection of the society is more than Rs.20 lakhs a year.

The AAR ruled that service by an unincorporated body or a non-profit entity to its own members is exempt up to an amount of Rs. 7500 per member for sourcing goods or services from a third person for the common use of its members in a housing society or a residential complex.

The AAR said that the aggregate turnover of a Residents' Welfare Association (RWA) exceeds Rs. 20 lakhs in a financial year. If the amount collected for maintenance per member exceeds Rs.7500 then the entire amount is chargeable to GST at the rate of 18%. For example, if the monthly maintenance charges are Rs.900 per member, 18% GST is payable on the entire amount, not the difference.

The AAR 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 an RWA need not pay tax on the amounts so collected.

"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 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," the AAR added.

Applicant's Name: M/s. Jayabheri orange county owners association

Citation: TSAAR Order No.29/2022

Dated: 03.06.2022

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