Taxability of interest earned by Resident Welfare Association

• June 15, 2020
• CA Chandan Agarwal's Office

Note on Taxability of Interest Income from fixed deposits made out of corpus fund and maintenance surplus. 

PRINCIPLES OF MUTUALITY  

The Resident Welfare RWA’S( RWA) is primarily formed with a purpose to maintain, upkeep and provide amenities to the apartment owners/occupiers. Maintenance fee is collected every year for the purpose of the same. Rwa’s normally deposit the corpus fund received from the builder at the time of handing over of the maintenance activity to the RWA’S and also collects contribution towards corpus fund as and when required. Normally as per the Bye laws of the RWA’S, such Corpus funds are not freely available for utilization and there is a restriction on its usage. Such corpus fund is invested in bank fd’s and the RWA’S earn interest out of it.

For the purpose of this note, it is assumed that the Corpus fund is collected only for the purpose of capital expenditure.

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