GST Council Meet likely to discuss GST levied on RWA Maintenance Charges

In a major development for residents and Resident Welfare Associations (RWAs) across the country, the GST Council is expected to consider raising the GST threshold limit for maintenance charges at its 54th meeting on September 9.

According to sources, the monthly threshold limit could be raised to Rs.9,000 and Rs.10,000. Currently, maintenance charges paid by residents to RWAs are exempt from GST up to Rs.7,500 per month per member. However, if the monthly charge exceeds this limit, GST is imposed on the entire amount, provided the RWA’s overall turnover exceeds Rs.20 lakh.

In addition, the GST imposition to the transfer of development rights within joint development agreements (JDAs) in real estate will most likely be reviewed. A joint development agreement (JDA) is a legal contract that allows landowners and developers to collaborate on construction projects on their properties.

In India, JDAs have become a popular strategy for real estate development in a variety of sectors. The Council may also deliberate on properties that are currently under construction. According to reports, the real estate panel supports lowering GST rates on under-construction properties in order to improve housing affordability.

In related news, there is still uncertainty about the rollout of GST on commercial transactions executed by PoS machines, QR codes, and net banking for amounts less than Rs.2000.

According to sources, while the GST authorities have raised tax demands on certain transactions in this category, clarification on GST applicability is still pending. The imposition of GST at the rate of 18% on such transactions could be discussed at the 54th meeting. Earlier, this newspaper stated that the council meeting would focus on recommendations to rationalize the current GST structure, which levies an 18% tax on medical premiums.

Sources said that proposals under consideration include allowing mediclaim companies to charge a reduced GST rate of 5% without the benefit of an input tax credit (ITC) or implementing a standard 5% GST rate for B2C supplies.

Another significant matter on the agenda will be clarification on the valuation of payments for services received from related parties, especially in light of recent incidents involving Infosys. This clarification is expected to provide much-needed assistance to businesses that conduct inter-company transactions inside the GST framework.