Pradeep Jain - Chartered Accountant

Query

() Posted On: 15 Jul, 2020

In Vizag, in our apartment, we all pay to our Society towards water charges on actual consumption, we all have individual meters. Total we have 80 flats in our apartment. The Society pay 2 Municipal authorities as per the bill raised by them. There are some common areas also where Society uses water, difference between amount received by the flat owner?s n actual bill raised by Municipal authorities are consumption of Society. My question here is should we charge Service Tax on amount collected from the residents? If so, what is the percentage to be applied on actual charges? Our Society raises Invoice on each flat owner foractual consumption of water charges.

Ans. Circular No. 109/28/2019-GST dated 22.07.2019 was issued in clarification to GST on monthly subscription/contribution charged by a Residential Welfare Association from its members. In this circular the following issue and clarification has been issued Sl. No. Issue Clarification 1 Are the maintenance charges paid by residents to the Resident Welfare Association (RWA) in a housing society exempt from GST and if yes, is there an upper limit on the amount of such charges for the exemption to be available? Supply of service by RWA (unincorporated body or a non- profit entity registered under any law) to its own members by way of reimbursement of charges or share of contribution up to an amount of Rs. 7500 per month per member for providing services and goods for the common use of its members in a housing society or a residential complex are exempt from GST. Prior to 25th January 2018, the exemption was available if the charges or share of contribution did not exceed Rs 5000/- per month per member. The limit was increased to Rs. 7500/- per month per member with effect from 25th January 2018. [Refer clause (c) of Sl. No. 77 to the notification No. 12/2018- Central Tax (Rate) dated 28.06.2019] As said in the query it appears that the society is not acting as pure agent. If the charges collected are above Rs. 7500 per month per member then exemption is not available. And the rate of tax that shall be applicable is 18%. Moreover, recently in case of Apsara co-operative housing society, The Maharashtra AAR ruled that the activities of Property Taxes and water charges collected by society for paying to Municipal Corporation are covered under Section 7 of the CGST Act.

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