Maintaining green spaces in housing societies is more than a beautification task—it’s part of everyday upkeep. But when Resident Welfare Associations (RWAs) spend on garden-related items, one question often comes up: Can they claim Input Tax Credit (ITC) under GST?
Some believe that such expenses fall under blocked credits as per Section 17(5)(c) of the CGST Act, 2017. This section disallows ITC on inward services used for construction, which has created confusion. However, the government issued a clarification that helps RWAs understand what they can and cannot claim.
What the Law Says About ITC and Garden Expenses
Section 17(5) of the CGST Act lists certain goods and services that are not eligible for ITC. Clause (c) blocks ITC on works contract services used for construction of immovable property unless used to supply another works contract service.
At first glance, garden-related expenses might seem to fall under this category. However, this is not true for most regular maintenance activities.
Government Clarification for RWAs
To make things clearer, the Central Board of Indirect Taxes and Customs (CBIC) issued a circular on 22 July 2019. The circular confirmed that RWAs are eligible to claim ITC on:
- Capital goods like lawn furniture, water pumps, and generators
- Goods such as taps, pipes, and sanitary fittings
- Input services related to repair and maintenance work
This means RWAs can claim ITC on purchases and services used for garden maintenance, as long as these are not part of construction or permanent landscaping projects.
Can RWAs Claim ITC on Garden Tools and Services?
Yes, they can. Items like lawnmowers, hoses, pruning tools, and fertilizers are used to maintain the garden. These are not considered part of a construction project. So, the GST paid on such tools is eligible for ITC.
Likewise, if a society hires a service provider for monthly garden care, the GST charged on this service is also eligible for ITC. The key is that the expense should relate to regular upkeep, not construction of new structures.
When ITC Is Not Allowed
ITC is blocked when the expense involves construction of immovable property. For example, if a society builds a stone pathway or a permanent water fountain in the garden, it becomes a capital project. The GST paid on such construction services or materials cannot be claimed as ITC.
Important Points for RWAs
1. GST Registration
If the annual turnover of the RWA is above ₹20 lakh, GST registration is mandatory. Also, if monthly maintenance per member exceeds ₹7,500, the society must charge GST on the full amount.
2. Proper Invoices
To claim ITC, the RWA must have proper tax invoices. These invoices must include GST details, the supplier’s GSTIN, and the description of goods or services.
3. Accurate Accounting
The RWA should record eligible ITC in their accounting system and match it with their monthly GSTR-2B before filing returns.
Real-Life Example
A society buys garden tools worth ₹50,000 and pays 18% GST on the purchase. The GST amount is ₹9,000. Since these tools are used for routine garden upkeep, the society can claim the ₹9,000 as ITC, provided other GST conditions are met.
In another case, the society pays ₹25,000 per month to a gardening agency. The GST on this service is also claimable as ITC because the service is not part of a capital construction project.
Conclusion
RWAs must understand which garden expenses qualify for ITC. Most regular maintenance costs, like buying tools or hiring a gardener, are eligible. However, major landscaping or construction work is not.
By knowing the difference and keeping accurate records, RWAs can reduce their GST burden and stay compliant. Always consult a tax professional if you’re unsure about a specific transaction.
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This article is only a knowledge-sharing initiative and is based on the Relevant Provisions as applicable and as per the information existing at the time of the preparation. In no event, RMPS & Co. or the Author or any other persons be liable for any direct and indirect result from this Article or any inadvertent omission of the provisions, update, etc if any.
Published on: May 29, 2025