GST Application on Flat Owners
Shambhavi Sharma / 2021-05-11 10:24:38
The GST (Goods and Services Tax) is a single indirect tax that applies to the entire country. It is the tax that results from combining major federal and state indirect taxes. GST is a destination-based tax imposed on the purchase of goods and services throughout the world, effectively transforming the country into a single market.
Application of GST on Flats
When a home buyer buys a home, the Goods and Services Tax (GST) is applied. However, how many home buyers are aware that they will be required to pay GST on the monthly maintenance fees they will be paying to the Residents Welfare Association (RWA)? According to tax and investment experts, a flat owner and RWA would be required to pay GST if no requirements are met. They said that once the requirement is met, both the RWA and the flat owners would be required to pay 18% GST, even if the RWA does not have a GST registration.
When it comes to the GST laws that apply to RWAs and flat owners, According to Mumbai-based tax and investment expert Balwant Jain, GST applies to both the RWA and the flat owner if the flat owner's monthly maintenance charges are Rs.7,500 or more and the RWA's annual collection is Rs. 20 lakh or more.
According to Jain, either the RWA or the flat owners will pay GST, or none at all. He explained that if the RWA's annual collection exceeds 20,000 rupees but the monthly maintenance paid by the flat owner is less than 7,500 rupees, GST would not be extended to either of them. Similarly, if the flat owner pays Rs. 7,500 or more but the RWA's annual collection is less than Rs. 20 lakh, neither of them will be required to pay GST Registration on maintenance.
How much GST would be levied if both the RWA and the flat owner meet the GST maintenance requirements? Jitendra Solanki, a SEBI-registered tax and investment expert, stated that if both the RWA and the flat owners meet the GST requirements, both would be required to pay 18% GST on maintenance charges.
RWA, on the other hand, can demand input tax credit for taxes paid on capital goods such as water pumps, furniture, and generators. The RWA can also receive input tax credit on taxes paid on goods and services, according to Solanki.