No GST on housing societies with turnover below Rs 20 lakh
By Legal Bureau
Services provided by housing societies resident welfare association will not become expensive under the Goods and Services Tax (GST) regime, the finance ministry said on Thursday.
Resident welfare association will be required 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 by way of supplying of services and goods is also more than Rs 20 lakhs.
In the GST regime, businesses with turnover of up to Rs 20 lakh are exempt.
Further, if the aggregate turnover of such RWA is up to Rs 20 lakh in a financial year, then such supplies will be exempted from GST, even if charges per member are more than Rs 5,000.
However, RWAs supplying of services and goods aggregating more than Rs 20 lakhs per annum will attract 18 per cent GST.
Clarifying reports that services provided by a Housing Society Resident Welfare Association (RWA) will become expensive under GST, the ministry said these are completely unsubstantiated.
“Under GST, the tax burden on RWAs will be lower for the reason that they would now be entitled to ITC in respect of taxes paid by them on capital goods (generators, water pumps, lawn furniture), goods (taps, pipes, other sanitary/hardware fillings) and input services such as repair and maintenance services,” the ministry said.
Input tax credit (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.
“Thus, there is no change made to services provided by the Housing Society (RWA) to its members in the GST era,” it said.
In a separate statement, the ministry reiterated that services provided by an educational institution to students, faculty and staff are fully exempt from GST.
There will be no GST on annual subscription/fees charged as lodging/boarding charges by educational institutions from its students for hostel accommodation.
Clarifying reports that 18 per cent GST will be levied on annual subscription/fees charged for lodging in hostels, the ministry said there is no change in tax liability relating to education and related services in the GST era, except reduction in tax rate on certain items of education.
Services provided by an educational institution to students, faculty and staff are fully exempt.
Educational institution has been defined as an institution imparting pre-school education and education up to higher secondary school or equivalent, education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force, education as a part of an approved vocational education course.
Thus, services of lodging/boarding in hostels provided by such educational institutions which are providing pre- school education and education up to higher secondary school or equivalent or education leading to a qualification recognised by law, are fully exempt from GST, the ministry said.
Annual subscription/fees charged as lodging/boarding charges by such educational institutions from its students for hostel accommodation shall not attract GST, it added.