Residents association may be out of tax ambit

Resident Welfare Associations (RWAs) have reason to cheer. For, the Union budget proposes to exempt tax on services they provide to members who contribute Rs 3,000 or less per month.
This comes as a huge relief for RWAs who have been paying a service tax of 12 per cent. As of now, most RWAs in Hyderabad collect amounts ranging from Rs 500 to Rs 2,000 from their members, with amounts varying as per the resident profile and services provided to them. RWAS are common not only among apartments, but also in colonies that include independent housing units.

While all associations provide services such as a security guard at the entrance, sweeping and sanitation in the common areas, maintenance of lights and lifts, the ones who charge more from their members also take up responsibilities like ensuring water supply throughout the year and in maintaining facilities like playgrounds, landscaped gardens and the building itself.
In recognition of their growing importance, the Election Commission recently assigned them a role in updating electoral rolls, a responsibility hitherto held by municipal authorities.

Exempting RWAs from the ambit of service tax is a welcome move. Since RWAs are increasingly taking up tasks and roles that should be handled by various government bodies, our associations should be rewarded. The fact that the Union finance minister has mentioned RWAs in his budget is a recognition of its growing importance. Also, the exemption will reduce the burden of tax on RWAs, so it is a salutary step.