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Flat Owners Liable To Pay 18 Percent GST

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Flat Owners Liable To Pay 18 Percent GST

The Finance Ministry has announced that flat owners should pay 18 percent GST if monthly maintenance fees to RWA exceed Rs 7,500

The Finance Ministry said that flat owners would have to pay 18 percent GST if their monthly maintenance fees to resident welfare associations (RWA) is more than Rs 7,500. 

The Resident Welfare Associations (RWA) are liable to collect GST on fees charged from members if the payment exceeds Rs 7,500 per flat per month. The GST is applicable if the annual turnover of RWA by way of supply of services and goods exceeds Rs 20 lakh. 

The Finance Ministry clarified in a circular that GST exemption is applicable only if the charges do not exceed Rs 7,500 per month per RWA member. The circular said that in case the charges exceed Rs 7,500 per month per member, the entire amount is taxable. For example, if the maintenance charges are Rs 9,000 per month per member, GST at 18 percent shall be payable on the entire amount of Rs 9,000 and not on the amount left after deducting 7500. In short, the calculation of (Rs 9,000-Rs 7,500) = Rs 1,500 cannot be applied. 

For people who own two or more flats in the residential complex, the Ministry has made it clear that in such cases the ceiling of Rs 7,500 per month per member shall be applicable separately on each residential apartment owned by them.

For example, if a person owns two residential apartments in a residential complex and pays Rs 15,000 per month as maintenance charges towards the maintenance of each apartment to the RWA (Rs 7500 per month in respect of each residential apartment), the exemption from GST shall be available to each apartment. 

The Ministry further clarified that RWAs are eligible to take input tax credit (ITC) of Goods and Services Tax (GST) paid by them on capital goods like generators, water pumps, lawn furniture etc and other goods including taps, pipes, other sanitary/hardware fillings and input services such as repair and maintenance services.

Source: Business Standard

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