GST Council recommends granting relief from GST on services provided by the Resident Welfare Associations (RWAs) to their Members

Threshold Exemption Limit under GST for monthly contributions made by members for services provided by RWAs raised from ₹ 5,000 to ₹ 7,500 per month per person

In its 25^th Meeting held on 18^th January, 2018, the GST Council had recommended several measures granting relief from GST on a number of goods and services. One of the important reliefs granted by the Council is to enhance the limit of contribution made by members of a Resident Welfare Association (RWA) for the purpose of exemption from GST.

The Council had recommended that the limit may be enhanced from ₹ 5,000 to ₹ 7,500 per month per member. Services provided by RWAs(unincorporated body or a registered non-profit entity) to their members were hitherto exempt against contribution of up to an amount of five thousand rupees per month per member. Requests were received from several quarters to enhance the contribution limit of five thousand rupees per month per member for exemption.

As a result, RWAs shall be required to pay GST on monthly subscription/contribution charged from its members if such subscription is more than Rs.7,500 per month per member and the Annual Turnover of RWA by way of supplying of services and goods is also Rs. 20 lakhs or more.

Under GST, the tax burden on RWAs will be lower for the reason that they would now be entitled to Input Tax Credit (ITC) in respect of taxes paid by them on capital goods (generators, water pumps, lawn furniture etc.), goods (taps, pipes, other sanitary/hardware fillings etc.) and input services such as repair and maintenance services. ITC of Central Excise and VAT paid on goods and capital goods was not available in the pre-GST period and these were a cost to the RWA.

The Notifications giving effect to the above recommendations of the GST Council have been issued and have come into force on 25^th January, 2018. Accordingly, from 25 January 2018, the services provided by Resident Welfare Association to its members against contribution-up to an amount of ₹ 7,500per month per member have been exempted from GST.

RWA contribution exemption increased, limiting GST liability to contributions above the revised threshold and subject to turnover condition. The GST exemption threshold for monthly member contributions to Resident Welfare Associations has been raised so that contributions up to the revised per-member monthly amount are exempt from GST; amounts above the revised threshold attract GST only if the RWA's annual turnover from supplies of goods and services meets the statutory turnover condition. Taxable RWAs are eligible to claim Input Tax Credit on capital goods, goods and input services used in supplying those services. The recommendations have been implemented by notification effective from the notification date.