how GST applies to flat owners, RWAs

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GST

Goods and Services Tax (GST) is applicable when a home buyer buys a home. However, how many of the home buyers know that they may have to pay GST on maintenance charges they will be paying monthly to the Residents Welfare association or RWA? According to tax and investment experts, a flat owner and the RWA will have to pay GST subject to fulfillment of certain conditions. They said that after fulfilling the condition both RWA and flat owners will have to pay 18 per cent GST even when the RWA doesn’t have GST registration.

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Speaking on the Goods and Services Tax rules applied on RWAs and flat owners Mumbai-based tax and investment expert Balwant Jain said, “GST becomes applicable on both RWA and flat owner if the monthly maintenance charges being paid by the flat owner is ₹7,500 or above and the annual collection of the RWA is ₹20 lakh or more.”

Jain said that Goods and Services Tax will be paid by both RWA and the flat owners or by none. He said that in case, the RWA’s annual collection is more than ₹20 lakh per annum but the monthly maintenance given by the flat owner is less than ₹7,500, then GST won’t get applied to any of them. Similarly, if the flat owner is paying ₹7,500 or more but the annual collection of the RWA is less than ₹20 lakh, in that case too, none of them would pay Goods and Services Tax on maintenance.

On how much Goods and Services Tax will be levied if both RWA and flat owner fulfill the GST norms on maintenance SEBI registered tax and investment expert Jitendra Solanki said, “In case both RWA and flat owners fulfill the GST norms, both will have to pay 18 per cent GST on maintenance charges. But, RWA can claim input tax credit on tax paid by them on capital goods like water pump, furniture, generator etc.” Solanki said that input tax credit can be claimed by the RWA on tax paid on goods and services too.

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