Top Stories Maintenance Charges collected by Residential Welfare Associations exceeding Rs.7,500 per month fully Taxable under GST at 18%: AAR [Read Order] By Devanand T R – On March 15, 2024 2:43 pm – 2 mins read The West Bengal Authority for Advance Ruling ( AAR ), has made a clarification regarding the taxation of maintenance charges levied by Residential Welfare Associations ( RWAs ) on their members. The ruling clarified that maintenance charges exceeding Rs.7,500 per month per member are fully taxable under the Goods and Services Tax ( GST ) regime at the rate of 18%.

The ruling came as a clarification on a matter that has been a point of contention among RWAs and their members. RWAs play a crucial role in managing the upkeep and maintenance of residential complexes and housing societies, collecting monthly maintenance charges from their members to cover various expenses such as common area maintenance, security services and utilities. The clarification was sought before the West Bengal AAR by the applicant PRINSEP ASSOCIATION OF APARTMENT OWNERS, Kolkata. They are an Association of Persons ( AOP ) registered under the West Bengal Act XVI of 1972, responsible for managing the day-to-day activities, organising events and maintaining facilities within their apartment complex.

The issue addressed in the ruling pertains to the applicability of GST on these maintenance charges when they exceed a certain threshold. Prior to this ruling, there was ambiguity regarding whether GST would be levied only on the amount exceeding Rs.7,500 or on the entire maintenance charge collected from members. The ruling provides clarity by stating that if the maintenance charges collected by an RWA exceed Rs.7,500 per month per member, the entire amount is subject to GST. This means that RWAs will need to collect GST at the rate of 18% from their members if the maintenance charges surpass the specified threshold. The decision has significant implications for both RWAs and their members. RWAs will need to maintain thorough records of their revenue and expenses.

For members of residential complexes and housing societies, this ruling leads to an increase in the overall amount they pay towards maintenance charges. In result, the two-member authority comprising Dr. Tanisha Dutta (CGST Member) and Joyjit Banik (SGST Member) has held that if the maintenance charges levied by the Residential Welfare Associations ( RWAs ) on their members exceed Rs.7500 per month per member, then the entire amount is subject to GST at the rate of 18%. It was also clarified that the benefit of Notification No. 12/2017 dated 28.06.2017 (Sl. No. 77) read with Notification No. 02/2018 dated 25.01.2018 which provides for exempting from tax is not available when the maintenance charges exceed Rs. 7,500 per month per member. Where the charges exceed this limit, the entire amount becomes taxable under GST.