RWA GST exemption under Serial No. 77 applies per member if monthly maintenance is Rs. 7,500 or less

AAR West Bengal ruled that GST exemption under Serial No. 77 of Notification 12/2017 applies on member-specific basis for RWAs. If monthly maintenance collected from a member is Rs. 7,500 or less, no GST liability arises on that amount, regardless of higher collections from other members. The exemption is determined individually per member rather than collectively for the entire RWA.

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Issues:
Determining the taxability of supply of services by a Residential Welfare Association (RWA) to its members whose monthly subscription doesn't exceed Rs. 7500/- per month, considering the RWA also collects monthly subscription exceeding Rs. 7500/- from other members.

Analysis:
The applicant, a Residential Welfare Association (RWA), sought an advance ruling under the GST Act regarding the applicability of Notification No. 12/2017 on its members' monthly contributions. The RWA provides services by way of reimbursement of charges or share of contribution for goods and services procured from a third party. The applicant questioned whether GST should be charged from all members or only from those whose monthly contributions exceed Rs. 7,500, despite the RWA's annual turnover being over Rs. 20 lakhs. The questions raised fall under clause (b) of sub-section (2) of section 97 of the GST Act, and as they were not previously decided by any authority, the application was admitted.

The applicant argued that the notification did not specify the chargeability of GST from members whose monthly contributions were less than Rs. 7,500, while others contributed more. The Revenue did not provide any view on the issue raised by the applicant. The Authority observed that the applicant's questions could be summarized into a single issue: determining the taxability of services provided by the RWA to members based on their monthly subscriptions. The Authority referred to Circular No. 109/28/2019-GST, which clarified that services provided by an RWA up to Rs. 7,500 per month per member for common use are exempt from GST.

The Authority further clarified that the exemption is member-specific, meaning if the RWA collects up to Rs. 7,500 per month from a member, it is not liable to pay tax on that amount, even if other members contribute more. The ruling stated that the applicant would not be liable to pay tax on amounts collected from members if they do not exceed Rs. 7,500 per month per member. This ruling aligns with the provisions of the GST Act and the exemption criteria specified in Notification No. 12/2017.

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