.png)
Other
Article on Taxability of Resident Welfare Associations (Club, Association, Society or any other Body
February 28, 2020
Dear Friends
Let us talk about GST applicability for RWA i.e Resident welfare associations.
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)
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 |
| 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 |
2
| 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 |
3
| When RWA Charges 9000/- per month , whether 1500 (9000-7500) is taxable or 9000 completely is taxable | Complete 9000/- is taxable
|
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
