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GST On Maintenance Charges
On 22 July 2019, the Government had issued Circular No.109/28/2019- GST on ‘Issues related to GST on monthly subscription/contribution charged by a Residential Welfare Association (RWA) from its members’. An RWA provides multiple services and goods for the common use of its members in a housing society or a residential complex and collects maintenance charges for the same.
In this article, we will discuss the applicability of GST on Maintenance Charges, GST on society maintenance, RWA Maintenance Charges, ITC on society maintenance charges, GST on maintenance services, HSN code for society maintenance charges, GST rate on maintenance charges, and much more.
Exempt Services
Maintenance charges/subscription charges paid by residents to the Resident Welfare Association* are exempt if the amount charged does not exceed INR 7,500 per month, per member (prior to 25 January 2018 the limit was INR 5,000). However, if these charges exceed INR 7,500, GST on annual maintenance charges is chargeable on the entire amount charged. *Resident Welfare Association *RWA): RWA is an unincorporated body or a non--profit entity registered under any law in force.
Note: If the aggregate turnover of an RWA does not exceed INR 20 lakhs in a financial year, the RWA will not be required to take GST registration nor pay GST even if the amount of maintenance charges exceeds INR 7,500 per month per member. It is the standard GST rate for Maintenance Charges and even GST on common area maintenance charges.
| Annual turnover of RWA is more than INR 20 lakhs | Monthly maintenance charge is more than INR 7,500 | Should RWA register under GST? | Should RWA pay GST? | |
| 1 | No | No | No | No |
| 2 | No | Yes | No | No |
| 3 | Yes | No | No | No |
| 4 | Yes | Yes | Yes | Yes |
Input Tax Credit (ITC)
Resident Welfare Associations (RWAs) are entitled to take ITC of GST paid on capital goods (generators, water pumps, lawn furniture etc.), goods (taps, pipes, other sanitary/hardware fillings etc.) and input services (repair and maintenance services) under GST on maintenance charges of residential building.
As per general business sense, a person who owns two or more residential apartments in a housing society or a residential complex will generally be a member of the RWA for each residential apartment owned by him/her separately. The ceiling of INR 7,500 per month per member will be applied independently for each residential apartment owned by him/her.
The exemption from GST on maintenance charges in apartments charged by an RWA from its residents is available only if such charges do not exceed INR 7,500 per month per member. In case the charges exceed INR 7,500 per month per member, the entire amount is taxable.
For example, if the maintenance charges are INR 8,500 per month per member, GST @18% shall be payable on the whole amount of INR 8,500 and not on INR 1,000 (INR 8,500 - INR 7,500).
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