With resident welfare associations (RWAs) of Chennai coming under the purview of the new GST regime, those living in apartments within the city will need to pay an additional 3% towards flat maintenance charges.
Maintenance charges of 15 apartment complexes on Rajiv Gandhi Salai have gone up in the wake of GST, says property manager Chandrasekar Kaliamurthy. Earlier, the service tax on maintenance charges for apartments located at Sholinganallur, Chemmencherry, Nalavur and Kelambakkam used to be 15%. But it has increased to 18% after the GST was implemented, he said. The maintenance charges range from Rs. 3000 to Rs. 10,000, he added.
K Ketharinath, secretary of Jains Saagarika Apartment Owners Association at MRC Nagar, said maintenance charges have been raised by Rs. 1000 to Rs. 2200 per month depending on the floor space. “Though there is provision for input tax credit, the cycle time is longer and more complicated. We are not sure when we will be reimbursed,” he added.
RWAs are required to pay GST on monthly subscription or contribution charged from its members if the amount is more than Rs. 5000 per occupant and the annual turnover of the RWA engaged in supplying services and goods exceeds the threshold of Rs. 20 lakhs. However, RWAs that record a yearly turnover less than Rs. 20 lakhs are exempted from GST even if the monthly contribution of its members is above Rs. 5000.
The Federation of OMR Residents Associations (FOMRRA) has questioned the rationale behind including RWAs in GST. Harsha Koda, coordinator of FOMRRA, wondered how the government arrived at the arbitrary ceiling of Rs. 5000 per month. “Compared with tier two cities, the cost of living in metropolitan cities like Chennai is higher. Several residential complexes have more than 100 apartments with their monthly maintenance charges alone running into lakhs every month,” he said. Noting that GST was a double blow for them with cost of services including security having jumped up, he said, “RWAs should have not been brought under GST as they are functioning under no profit and no loss basis without any commercial activity.”
Koda said that the association would join hands with like-minded housing societies to protest against the move. “We will be sending representations to the Union finance ministry demanding the exemption of RWAs from GST,” he added.