No GST upto monthly collection of Rs 7500 per member even if yearly collection of society exceed Rs 20 L: AAR

M/s. Jayabheri Orange County Owners Association is a Resident Welfare Association (RWA) collecting monthly maintenance charges, certain annual fee by name sinking fund and charges for electricity used in common area. They are desirous of clarification as to whether these collections are liable to tax under GST. Hence this application.

Questions raised:

1. Is GST is applicable on monthly collection not exceeding Rs.7500 per member as total collection of the society is more than Rs.20 lakhs a year?

2. Is GST is applicable on total monthly maintenance of Rs.7500 per member plus annual sinking fund collected in July or august month in which annual sinking fund will be collected due to monthly collection including annual sinking fund exceeding Rs.7500 per member for that month or only on sinking fund which is over and above Rs.7500 per member?

3. Is GST is applicable on monthly collection of common area electricity charge paid by the members in addition to the Rs.7500 monthly maintenance charged on the basis of actual bill divided by carpet area of 9,01,913 sq. ft pro-rata charged to respective member’s flat carpet area?

Ruling:

The Serial No. 77 of Notification No. 12/2017 as amended vide Notification No. 02/2018 dt: 25.01.2018 states that service by an unincorporated body or a non-profit entity to its own members is exempt upto an amount of Rs. 7500 per member for sourcing goods or services from a 3rd person for the common use of its members in a housing society or a residential complex. Therefore where the aggregate turnover of a Residents Welfare Association (RWA) exceeds Rs.20 lakhs in a financial year and 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 maintenance charges are Rs.9000 per month per member, GST @18% shall be payable on the entire amount and not on the difference amount.

Further 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 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 month 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.