Whether maintenance charge upto 7500 per month per unit are exempt from ITC reversal

[navnath padwal]

Services provided by a RWA to its members for use of common facilities are exempt under GST where the member contributions are up to ₹ 7,500/- per month (‘threshold limit’). In the initial period, CBIC had issued a flyer in case of co-operative housing societies wherein it was clarified that in case where contributions exceeded the threshold limit, only the differential amounts would be taxable under GST and not the entire amount collected. 

However, a CBIC Circular issued in 2019 states that exemption shall not be available if the contribution collected exceeds the threshold limit and GST shall be applicable on the entire amount collected by the RWA.  Now, this controversy has been settle by The Hon’ble High Court by stating that monthly contribution upto 7500 is exempt  and only differential amount is taxable. 

now question is whether we need to reverse the ITC related to amount upto 7500/- as per section 17*2) of CGST  act, 2017. for the same we check the definition of " exempt supply " as given under section 2(47) of CGST act 2017. 

(47) “exempt supply” means supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under section 11, or under section 6 of the Integrated Goods and Services Tax Act, and includes non-taxable supply;

we will  see the govt has defined that exempt supply mean supply which nil rated or tax on the same is wholly exempt. therefore one can persume that  maint charge are not wholly exempt , these are partially exempt upto 7500/- per unit per month. 

Therefore my view that we need not require to reverse the proportionately ITC . 

by

CA Navnath Padwal 

Navi Mumbai