No GST on Resident Welfare Association Services: Finance Ministry

The Ministry of Finance on January 25 had announced that no Goods and Service Tax would be implemented on Resident Welfare Association (RWA) services.

Currently RWA services to its members amount to up to Rs 7,500 per month per member. “The notification giving effect to the recommendations of the GST Council have been issued and came into force on January 25, 2018. Accordingly, from 25 January 2018, the services provided by RWA to its members against contribution-up to an amount of Rs 7,500 per month per member have been exempted from GST,” read Ministry of Finance’s statement.

Whereas, the annual turnover of any RWA by way of supplying of services and goods has remained unchanged at up to Rs 20 lakh, any amount more will attract GST taxation of 18%.

Earlier the threshold exemption limit under GST for monthly contributions for each of the members was Rs 5,000.

As per the definition for RWAs, it can be either an unincorporated body or a registered non-profit entity.

“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 fittings, etc.) and input services such as repair and maintenance services. ITC of Central Excise and Value Added Tax paid on goods and capital goods was not available in the pre-GST period and these were a cost to the RWA,” mentioned the statement.

The recommendation to raise the exemption limit was made in GST Council’s 25th meeting held last month after several requests were received to enhance the contribution limit for exemption.