No GST on hostels in educational institutes: Finance Ministry

New Delhi: The finance ministry said on Thursday that members of resident welfare association (RWA) will be required to pay GST on monthly subscription only if it is more than Rs 5,000 per member and the annual turnover of RWA by way of supplying of services and goods is also over Rs 20 lakhs. 

The ministry also denied reports that 18 per cent GST will be imposed on annual subscription/ fees charged for lodging in hostels in educational institutes.  

“There are some press reports that services provided by a housing society (RWA) will become expensive under GST. These are completely unsubstantiated,” the ministry said. 

“It may be mentioned that supply of service by RWA (unincorporated body or a registered non-profit entity) to its own members by way of reimbursement of charges or share of contribution up to an amount of Rs 5,000 per month per member for providing services and goods for the common use of its members in a housing society or a residential complex are exempt from GST,” said the ministry. It said that if the aggregate turnover of such RWA is up to Rs 20 lakh in a financial year, then such supplies would be exempted from GST even if charges per member are more than Rs 5,000.

Under GST, it said the tax burden on RWAs will be lower for the reason that they would now be entitled to input tax credit (ITC) in respect of taxes paid by them on capital goods (generators, water pumps, and lawn furniture among others).