The Finance Ministry has clarified that housing societies’ resident welfare associations (RWA) will be exempted from the Goods and Services Tax (GST) regime. This has pleased home owners as services provided by RWAs will not become expensive due to GST.
The government explained further that RWAs will have to pay GST on monthly subscription/contribution charged from its members if such payment is more than Rs 5,000 per member and the annual turnover of RWA via supply of goods and services is also greater than Rs 20 lakh. In addition, if the aggregate turnover of such an RWA in a financial year is not more than Rs 20 lakh, then such supplies will be exempted from GST, even if the per member charges exceed Rs 5,000.
However, in case of RWAs where the turnover from supply of goods and supply is over Rs 20 lakh per annum, GST will be charged at 18 percent.
The Federation of Noida Residents Welfare Associations (FONRWA) applauded this announcement as the exemption from GST will lower the tax burden on RWAs, entitling them to Input Tax Credit (ITC) for taxes paid on capital goods such as generators, water pumps, lawn furniture etc.