The Indian government has clarified the applicability of Goods and Services Tax (GST) on maintenance charges collected by Resident Welfare Associations (RWAs) or real estate builders. As per the new guidelines, an 18% GST on apartment maintenance will now be applied on charges exceeding INR 7,500 per month per apartment or if the annual turnover for the same surpasses INR 20 lakhs. 

Key Provisions 

GST Applicability Thresholds 

• Maintenance charges up to INR 7500 per month per apartment are exempt from GST. 
• If monthly maintenance charges exceed INR 7500 and the RWAs annual turnover is above INR 20 lakhs, GST at 18% applies to the entire amount, not just the excess amount over INR 7500. 

Multiple Apartment Ownership 

• For individuals owning multiple apartments, the INR 7500 exemption applies separately to each unit. 
• For instance, if a person owns two apartments and pays INR 7500 exemption for each, both are exempt. 

Input Tax Credit (ITC) 

• RWAs and Builders registered under GST can avail ITC on tax paid for goods and services used for maintenance, such as generators, water pumps and repair services. 

Implications for Residents 

• Residents should be aware that if their maintenance charges exceed INR 7500 and residential project’s annual turnover of maintenance fees is more than INR 20 lakhs, they will incur an additional 18% GST on apartment maintenance amount. This could lead to higher monthly expenses. 

RWAs must assess their annual turnover and the maintenance charges collected to determine GST obligations. Proper registration and compliance are essential to avoid penalties. Read more about Detailed Information on Waqf Amendment Bill

For detailed information, residents and RWAs can refer to the official circular issued by the Finance Ministry and consult tax professionals for guidance.