Other Article on Taxability of Resident Welfare Associations (Club, Association, Society or any other Body
Financial Year: 2020
Dear Friends
Let us talk about GST applicability for RWA i.e Resident welfare associations.
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Section 2(17) Business includes (a) ----------- (b) ----------- (c) ----------- (d) ------------ (e) "provision by a club, association, society or any other body (for a subscription or any other consideration) of the facilities or benefits to its members |
So now GST is applicable on subscription received by any association.
Governement issued Notification No 12/2017 Central Tax (Rate) dated 28/06/2017 which has exempted GST on associations upto 5000 Rs (Point No 77)
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Service by an unincorporated body or a non- profit entity registered under any law for the time being in force, to its own members by way of reimbursement of charges or share of contribution (a) as a trade union (b) for the provision of carrying out any activity which is exempt from the levy of Goods and service Tax; or (c) up to an amount of Rs 5000/ per month per member for sourcing of goods or services from a third person for the common use of its members in a housing society or a residential complex. |
So now GST is applicable on welfare associations if they receive amount of more than Rs 5000/- from a single member per month.
Govt made a change in the aforesaid Notification on 25/01/2018 and increased this limit of Rs 5000/- to Rs 7500/- Per Month.
Notification No 02/2018 Point No (p) increased the limit of Rs 5000/- to 7500/- per member per month
| (p) against serial number 77, in the entry in column (3), in item (c), for the words “five thousand”, the words “seven thousand five hundred” shall be substituted; |
Author Comments:-
GST exemption limit will be applied on the basis of dates
| Date | Exempt Upto |
| 1st July 2017 to 24th Jan 2018 | Upto 5000/- Per Month Per Member |
| From 24th Jan 2018 to till date | Upto 7500/- Per Month Per Member |
So if any society receives contribution in excess of Rs 7500/- per month per member then whole amount will be taxable.
Govt has issued a new circular on 22nd July 2019 (Circular No 109/28/2019)
Short Points About the Circular
| Questions | Answers |
| Whether 20 Lakhs/40 Lakhs Turnover Limit will be allowed to RWAs | Yes, They need to collect GST only when they receive more than 20 Lakhs /40 Lakhs in a year and Per Member Contribution Exceeds 7500/- Per Month |
| RWA Receives 20 Lakhs/40 Lakhs or Less | |
| (a) Member Contribution is 7500/- Per Month or Less | Exempt |
| (b) Member Contribution is More Than 7500/- Per Month | Exempt |
| RWA Receives More Than 20 Lakhs/40 Lakhs | |
| (a) Member Contribution is 7500/- Per Month or Less | Exempt |
| (b) Member Contribution is More Than 7500/- Per Month | Taxable |
| S No | Question | Answer |
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1 |
Is RWA Entitled to Take Input Tax Credit | Yes RWA is entitled to take Input Tax Credit of Inputs, Capital Goods and Input Services |
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2
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If a person owns 2 flats whether limit will be 7500/- or Rs 15000/- for 2 flats | Limit is 7500/- per member per flat. So if any member has 2 flats then limit will be calculated separately for each flat |
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3
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When RWA Charges 9000/- per month , whether 1500 (9000-7500) is taxable or 9000 completely is taxable |
Complete 9000/- is taxable
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Now Circular doesn't tell about the case:-
If RWA has turnover exceeding 40 lakhs and 8000/- Per member contribution is given by 50% members and rest members contribution is 3000/- per member per month.
Author Comments:-
In this case
GST Shall be levied on 8000/- Per Member Contribution
No GST Shall be levied on 3000/- Per Member Contribution
For any queries please email us
CA Rahul Gupta
RVG & Co
Support@carahulgupta.com