Here’s all you need to know about the Madras High Court order on GST to be paid by RWAs
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Here’s all you need to know about the Madras High Court order on GST to be paid by RWAs
RWAs collecting monthly maintenance amount above Rs 7500 per member would be able to save Rs 1350 per member per month, which hitherto was paid towards GST. Consequently, this will bring down the monthly bill of all the members of such RWA, tax experts said
VANDANA RAMNANI
The GST system, which subsumed 17 local levies like excise duty, service tax and VAT, was rolled out on July 1, 2017. (Representative image)
The GST system, which subsumed 17 local levies like excise duty, service tax and VAT, was rolled out on July 1, 2017. (Representative image)
In a major relief to members of resident welfare associations, the Madras High Court has ruled that the goods and services tax (GST) is applicable to monthly maintenance amount exceeding ₹7,500 only and not on the full amount. This means that only contributions to RWAs in excess of Rs.7,500 would now be taxable under GST.
As a result, the RWAs collecting monthly maintenance amount above Rs. 7,500 per member would be able to save Rs 1,350 per member per month, which hitherto was paid towards GST. Consequently, this will bring down the monthly bill of all the members of such RWA, experts said.
The order has emphasised the word ‘up to an amount of Rs.7,500 which can only be interpreted to state that any contribution in excess of the same would be liable to tax. Tax experts say that the term ‘upto’ connotes an upper limit. It is interchangeable with the term ‘till’ and means that any amount till the ceiling of Rs.7,500 would be exempt for the purposes of GST.
As regards the argument concerning slab rate, a slab is a measure of determining tax liability. The prescription of a slab connotes that income upto that slab would stand outside the purview of tax on exigible to a lower rate of tax and income above that slab would be treated differently.
Harpreet Singh, Partner, Indirect tax, at KPMG in India told Moneycontrol that the ruling should buttress, doubts if any, in the minds of RWAs across India, and thus, only value exceeding Rs 7500 should be taxable to GST. However, it could be safer for RWAs to file writs for seeking the said relief.
