2026-VIL-61-AAR
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SGST Advance Ruling Authority

GST – Karnataka AAR - Liability to GST on recovery of water charges by Residential Welfare Association (RWA) – Applicant-RWA recovers the actual cost of water supply from its members through separate monthly debit notes - Whether the recovery of water charges from its members, on an actual cost basis through separate monthly debit notes, is liable to GST even though water itself is exempt from tax – HELD - Though water is exempt from GST, the recovery of water charges is considered part of the overall maintenance services provided by the RWA to its members - The Association is not selling water as goods to its members. It is only recovering from members the actual cost of water procured from third parties such as municipalities or tanker suppliers. This recovery is integrally linked to the overall service of maintaining the residential complex and its common facilities - The recovery cannot be treated as a separate supply of water (goods) as the RWA is not selling water but only recovering the actual cost incurred - The recovery of water charges from members is taxable under GST as it forms part of the maintenance services provided by the RWA – Ordered accordingly - Taxability of recovery of electricity charges for common areas – HELD - The RWA recovers the actual electricity charges for the common areas from its members. Though electrical energy is exempt from GST, the recovery of such charges is considered part of the maintenance services provided by the RWA to its members and is subject to GST at the applicable rates, in accordance with the ceilings specified under the relevant GST notification. The RWA does not satisfy the conditions to be treated as a 'pure agent' for the recovery of electricity charges, and hence the recovered amount forms part of the consideration for the maintenance services. The recovery of electricity charges for common areas from members is taxable under GST - Collection of corpus fund - The amounts collected by the RWA from its members towards a 'corpus fund' for meeting future capital expenditures constitute a 'supply' under GST law. Such collections are treated as advances for a future supply, and GST is payable at the time of receipt of the corpus fund, as per the provisions of the CGST Act. The collection of corpus fund from members is taxable under GST at the time of receipt - Monthly charges for community center - The monthly charges levied by the RWA for the upkeep of the community center within the residential complex are classified as 'Monthly Maintenance Charges' and qualify for the exemption threshold of Rs. 7,500 per member per month as per the relevant GST notification, provided the total monthly contribution per member (including water and electricity charges) does not exceed the exemption limit. The monthly charges for the community center are exempt from GST up to the prescribed limit.
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