Service by an unincorporated body or a non- profit entity [ Entry No. 77 & 77A ] - GST Ready Reckoner - GST

Exemption Entry 77 Service by an unincorporated body or a non- profit entity registered under any law for the time being in force, to its own members by way of reimbursement of charges or share of contribution (a) as a trade union; (b) for the provision of carrying out any activity which is exempt from the levy of Goods and service Tax; or (c) up to an amount of ₹ 7,500/- per month per member for sourcing of goods or services from a third person for the common use of its members in a housing society or a residential complex. Exemption Entry 77A Services provided by an unincorporated body or a non-profit entity registered under any law for the time being in force, engaged in,- (i) activities relating to the welfare of industrial or agricultural labour or farmers; or (ii) promotion of trade, commerce, industry, agriculture, art, science, literature, culture, sports, education, social welfare, charitable activities and protection of environment, to its own members against consideration in the form of membership fee upto ₹ 1,000/- per member per year. ANALYSIS Co-operative Housing Societies are entities registered under the co-operative laws of the respective States. A Co-operative Housing Society is a collective body of persons, who stay in a residential society and as a collective body, they supply certain services to its members, like collecting statutory dues from its members and remitting to statutory authorities, maintenance of the building, security etc. If the aggregate turnover of housing society/ RWA providing services to its members is above the applicable threshold limit for registration12, it needs to take registration under GST in terms of section 22 of CGST Act. However taking registration does not mean that the housing society has to compulsorily charge GST in the monthly maintenance bills raised on its members. I f the services provided by it are exempt under an exemption notification, then it is not required to charge GST on the said services, even if it is registered under GST. there can be case where a society is registered under GST, but the monthly contribution received from all the members is less than Rs. 7 ,500/- per member (and the amount is for the purpose of sourcing of goods and services from a third person for the common use of its members). In such a case, no GST is to be charged by the housing society on the monthly bill raised by the society. GST on monthly subscription/contribution charged by a Residential Welfare Association from its members [ Circular No.109/28/2019- GST Dated 22nd July, 2019 ] Issue:- 1. Are the maintenance charges paid by residents to the Resident Welfare Association (RWA) in a housing society exempt from GST and 2. if yes, is there an upper limit on the amount of such charges for the exemption to be available Clarification Supply of service by RWA (unincorporated body or a non- profit entity registered under any law) to its own members by way of reimbursement of charges or share of contribution up to an amount of ₹ 7500 per month per member for providing services and goods for the common use of its members in a housing society or a residential complex are exempt from GST. Prior to 25th January 2018, the exemption was available if the charges or share of contribution did not exceed ₹ 5000/- per month per member. The limit was increased to ₹ 7500/- per month per member with effect from 25th January 2018. Issue :- A RWA has aggregate turnover of ₹ 20 lakh or less in a financial year. Is it required to take registration and pay GST on maintenance charges if the amount of such charges is more than ₹ 7500/- per month per member. Clarification No. If aggregate turnover of an RWA does not exceed ₹ 20 Lakh in a financial year, it shall not be required to take registration and pay GST even if the amount of maintenance charges exceeds ₹ 7500/- per month per member. RWA shall be required to pay GST on monthly subscription/ contribution charged from its members, only if such subscription is more than ₹ 7500/- per month per member and the annual aggregate turnover of RWA by way of supplying of services and goods is also ₹ 20 lakhs or more. Summary Annual turnover of RWA Monthly maintenance charge Whether exempt? More than ₹ 20 lakhs ( 10 l akh in case of Special Category States ) More than ₹ 7500/- No ₹ 7500/- or less Yes ₹ 20 lakhs or less ( 10 l akh in case of Special Category States ) More than ₹ 7500/- Yes ₹ 7500/- or less Yes Issues:- 1. Whether the RWA entitled to take input tax credit of GST paid inward supply of capital goods, input and services used by it for making supplies to its members and 2. use such ITC for discharge of GST liability on such supplies where the amount charged for such supplies is more than ₹ 7,500/- per month per member? Clarification RWAs are entitled to take ITC of GST 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. Issue:- Where a person owns two or more flats in the housing society or residential complex , whether the ceiling of ₹ 7500/- per month per member on the maintenance for the exemption to be available shall be applied per residential apartment or per person. Clarification As per general business sense, a person who owns two or more residential apartments in a housing society or a residential complex shall normally be a member of the RWA for each residential apartment owned by him separately. The ceiling of ₹ 7500/- per month per member shall be applied separately for each residential apartment owned by him. For example, if a person owns two residential apartments in a residential complex and pays ₹ 15000/- per month as maintenance charges towards maintenance of each apartment to the RWA (₹ 7500/- per month in respect of each residential apartment), the exemption from GST shall be available to each apartment. Issue:- 1. How should the RWA calculate GST payable where the maintenance charges exceed ₹ 7500/- per month per member? 2. Is the GST payable only on the amount exceeding ₹ 7500/- or on the entire amount of maintenance charges? Clarification The exemption from GST on maintenance charges charged by a RWA from residents is available only if such charges do not exceed ₹ 7500/- per month per member. In case the charges exceed ₹ 7500/- per month per member, the entire amount is taxable. For example , if the maintenance charges are ₹ 9000/- per month per member, GST @18% shall be payable on the entire amount of ₹ 9000/- and not on [₹ 9000 - ₹ 7500] = ₹ 1500/-