Home Economy and Finance No, there is no new tax on maintenance you pay to RWA as a flat owner

No, there is no new tax on maintenance you pay to RWA as a flat owner

The new GST provisions bring in exemption limit of Rs.7,500. Any registered RWA can collect GST only if actual individual home maintenance is Rs.7,500 or more. Earlier tax system had no such lower threshold.

There has been an outrage over a recent circular issued by the Finance Ministry that flat owners will have to pay GST at 18%, if their monthly contribution to the resident welfare association (RWA) exceeded Rs 7,500.

As soon as the Finance Ministry tax reform rules hit the public domain, a certain section of media has been actively propagating that the introduction of GST into RWAs charges tantamounted to ‘tax terrorism’. However, there has been no introduction of any new tax system pertaining to housing societies.

In fact, the Finance Ministry has tweaked an earlier ‘Service tax’ regime to bring in more transparent and efficient GST into housing societies and RWAs.

Is it really a new form ‘tax terrorism’ on the flat owners?

- Ad - - article resumes -

The Finance Ministry has notified reforms stating that all flat owners should have to pay GST at 18 per cent of their monthly contribution to resident welfare association (RWA) if it exceeds Rs.7,500. As per the rules, RWAs are required to collect GST on monthly subscription/contribution charged from its members if such payment is more than Rs 7,500 per flat per month and the annual turnover of RWA by way of supply of services and goods exceeds Rs 20 lakhs.

In a circular, the Finance Ministry has also relaxed norms by increasing the exemption limit. According to the norms, Goods and Service Tax (GST) is exempted to all individuals whose monthly maintenance charges are less than Rs.7,500.

The Ministry has further also clarified that RWAs are entitled to take input tax credit (ITC) of Goods and Services Tax (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.

The Ministry has also said that in such cases the ceiling of Rs.7,500 per month per member shall be applied separately for each residential apartment owned by him.

Why is the outrage?

The sense of false outrage over new tax circular comes on the pretext of a notion that the Finance Ministry has introduced a new tax structure into the housing sector, especially Resident Welfare association, which hitherto were free of any tax system as claimed by the media and some section in the social media.

However, it is untrue as a ‘Service tax’ system is already in place to tax flat owners on the monthly maintenance bills they pay to RWAs.

GST: More tax-friendly than previous Service tax regime

In the earlier ‘Service tax’ system, the system of tax credits never existed. The GST rules will now provide for an option for getting tax credits on services and goods as mentioned above.

According to popular Twitter economist Ashu Muglikar, there has been a lot of improvements within the proposed GST introduction. Firstly, the exemption limit on the annual turnover of RWA by way of supply of services and goods has been increased from Rs.10 lakhs to Rs.20 lakhs.

Secondly, If a person has multiple apartments under the limit of Rs.7,500, the exemption rules apply to all of those apartments, which was not available in the earlier tax system.

For example, if a person owns two residential apartments in a residential complex and pays Rs 15,000 per month as maintenance charges towards the maintenance of each apartment to the RWA (Rs.7,500 per month in respect of each residential apartment), the exemption from GST shall be available to each apartment.

Thirdly, the new GST provisions bring in exemption limit of Rs.7,500. Any registered RWA can collect GST only if actual individual home maintenance is Rs.7,500 or more. Earlier tax system had no such lower threshold.

The proposed GST introduction into monthly maintenance charges paid by the individual flat owners to RWAs is neither a new one nor a form of tax terrorism as claimed by sections of media. In fact, the recent changes will bring in more transparency by bringing efficient and effective means of tax collection. Most importantly, it makes maintenance much lesser with raising exemption limit and by bringing more clarity on tax credits.

Help Opindia Reach Every Indian. Share This Post
We need your support to survive in the media industry. Please consider paying us for the content we produce:

To know more about these payments, please click here.


Big Story

Strange rumours are coming out of Kashmir. Shah Faesal, supposedly, is Doval's stooge.

2019 World Cup Is Here!

Catch the latest on Cricket World Cup as it unfolds, special coverage by Opindia

To Advertise on Opindia.com Click here

Pakistan takes a cue from Congress yet again, asks ‘what happened to Rafale investigation’

In case Chaudhry missed out, the first Rafale jet is expected to be delivered next month.

NDTV’s Interim CEO Suparna Singh resigns with immediate effect

NDTV interim CEO Suparna Singh, whose appointment as CEO was not approved by I&B ministry, has stepped down
Hartosh Singh Bal resorts to factually incorrect details to target Amit Shah

Fact-Check: Unlike Chidambaram who tried to escape from law, Amit Shah resolutely faced trial and was acquitted

Hartosh Singh Bal equated P Chidambaram's disgraceful escape with Amit Shah's tenacity to face the law

Political Editor of The Hindu condones violence by Congress workers who beat up a man who shouted ‘Chidambaram Chor Hai’

Congress worker beats up a man for shouting 'Chidambaram Chor Hai', The Hindu Political Editor Nistula Hebbar shows excitement at the unruly behaviour.

P Chidambaram finally arrested by CBI after officers scale wall of his residence as the gates were locked

Chidambaram arrested from his residence after he addressed a press conference at Congress office

Former Pakistan army chief says Pakistan will use Kartarpur corridor to revive Khalistani terrorism in India

Gen Mirza Aslam Beg has said Pakistan army and the government should create trouble for India through Khalistan movement

Read about the P Chidambaram link in the new FIR filed against NDTV by the CBI

It appears that the INX Media case, the new FIR against NDTV and arrest of P Chidambaram are all interconnected.
Imran Khan has defended terrorists on Twitter

Imran ‘Taliban’ Khan goes on a bizarre defense of terrorists who may have infiltrated India disguised as Hindus

If harbouring, nourishing and sending terrorists to India was not enough, Pakistan has now shed all pretence and has been officially using terrorism as its state policy.

Is Shah Faesal Ajit Doval’s asset? Unlikely, Swati Chaturvedi may be unwittingly helping the central government

Strange rumours are coming out of Kashmir. Shah Faesal, supposedly, is Doval's stooge.
Rajiv Gandhi's tenure saw justice, freedom and institutions compromised at every level

No Sonia Gandhi, your husband did not stand for democracy or liberty

Rajiv Gandhi had infamously justified the Sikh massacre by saying, "When a big tree falls, the earth shakes."
Subscribe to Day's Top Stories
[newsletter_form type="minimal"]
- Advertisment -

Latest articles

Connect with us

181,299FansLike
172,747FollowersFollow
90,967SubscribersSubscribe
Help Opindia Reach Every Indian. Share This Post