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Resident Welfare Associations

RWA Audit & Accounting Services

RWA Audit

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Overview

RWA audit and accounting is the bookkeeping and the audit of a resident welfare association — the maintenance of the association's accounts under the Apartment Ownership and the state Apartment Acts and the by-laws, the accounting of the maintenance collections and the expenditure, the audit of the accounts, and the reporting to the members. The RWA is the legal entity that manages the society's common areas and funds, and its accounts are the record of the members' money.

The RWA's accounts are the accountability of the association to its members — the maintenance funds collected, the common expenses paid, the corpus and the sinking fund, the interest earned — and the audit is the independent check that the members rely on at the annual general meeting. The accounting follows the by-laws and the applicable state law, and the audit report is the document the members read before they approve the accounts.

The cost of weak RWA accounts is the members' distrust and the disputes: the funds that cannot be accounted for, the expenses that are questioned, the audit that fails to give the assurance. The RWA's accounts are where the association's credibility is maintained.

This service is for resident welfare associations. We maintain the RWA's accounts — the maintenance collections, the expenses, the funds and the bank reconciliation — prepare the financial statements, conduct or coordinate the audit under the applicable law, prepare the audit report and the annexures, and support the presentation to the members at the AGM, so the association's accounts are clean and credible.

How It Works

  1. 1

    RWA Books Setup

    We set up the RWA's books — maintenance, funds and the bank accounts.

    Harun Raaj & Associates does this1 week
  2. 2

    Monthly Accounting

    We maintain the collections, the expenses and the reconciliations monthly.

    Harun Raaj & Associates does thisMonthly
  3. 3

    Financial Statements

    We prepare the financial statements for the year.

    Harun Raaj & Associates does thisAnnual
  4. 4

    Audit & Report

    We conduct or coordinate the audit and prepare the audit report.

    Harun Raaj & Associates does thisAnnual
  5. 5

    AGM Presentation

    We support the presentation of the accounts to the members at the AGM.

    Harun Raaj & Associates does thisAnnual

Frequently Asked Questions

Is a Resident Welfare Association required to get its accounts audited and file income tax returns?
A Resident Welfare Association (RWA) registered under the Societies Registration Act 1860 or as a Section 8 company under the Companies Act 2013 is required to file income tax returns under Section 139(4A) of the Income Tax Act 1961 if its income exceeds the basic exemption limit, and must get accounts audited if gross receipts exceed ₹2.5 crore (for a trust/society claiming exemption under Section 12AB) per Section 12A(b) of the Income Tax Act 1961. Under the GST framework, RWAs are exempt from GST on maintenance charges up to ₹7,500 per member per month per Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017, as amended; charges above this threshold attract 18% GST. An RWA not registered under the SRA 1860 has no formal audit obligation under any statute but should maintain proper accounts for member accountability and dispute resolution.
How should an RWA account for sinking fund contributions and major repair expenditure?
The sinking fund collected from members for long-term capital repairs (e.g., external painting, lift replacement, water tank maintenance) should be treated as a restricted fund and maintained in a separate bank account to ensure it is not commingled with day-to-day maintenance collections. In the financial statements following the ICAI Guidance Note on Accounting by Not-for-Profit Organisations, sinking fund collections are credited to a 'Sinking Fund' on the liability side of the balance sheet, not recognised as income, until the expenditure is actually incurred. When capital expenditure is incurred from the sinking fund, the amount is transferred from the Sinking Fund to the Income and Expenditure account or capitalised as an asset depending on whether the expenditure meets the capitalisation criteria under AS 10 (Property, Plant and Equipment). The CA auditing the accounts should verify that sinking fund utilisation was approved by the general body of the RWA as required by the society's bye-laws.
What GST compliance is required for an RWA collecting monthly maintenance charges?
An RWA is required to register under GST if its annual aggregate turnover (total maintenance collected) exceeds ₹20 lakh (₹10 lakh for special category states) per Section 22 of the CGST Act 2017. Once registered, GST at 18% applies to the portion of maintenance charges exceeding ₹7,500 per member per month per Notification No. 12/2017-Central Tax (Rate); if all members pay ₹7,500 or less per month, the entire collection is exempt. The RWA is entitled to claim input tax credit on GST paid on repair and maintenance services, electricity, and other procurements used for common area maintenance, and should set off this ITC against its GST liability. Monthly GSTR-3B and annual GSTR-9 must be filed by registered RWAs; failure attracts late fees under Section 47 of the CGST Act 2017 of ₹50 per day (₹20 per day for nil returns) per return.
How should an RWA handle TDS on payments to contractors and service providers?
An RWA registered under the Societies Registration Act 1860 is a 'person' under Section 2(31) of the Income Tax Act 1961 and is required to deduct TDS if its gross receipts or turnover exceed ₹1 crore in a financial year (triggering the TDS obligation for non-individuals/non-HUFs), or if it falls under any other category mandating TDS deduction. Once subject to TDS, the RWA must deduct tax at source under Section 194C (contractor payments at 1%/2%), Section 194J (professional fees at 10%), and Section 194I (rent at 10%) wherever applicable. TDS must be deposited by the 7th of the following month (except March, where the due date is April 30) via Challan ITNS 281 and quarterly TDS returns in Form 26Q must be filed. Non-deduction or non-deposit of TDS makes the RWA liable to disallowance of the expenditure under Section 40(a)(ia) and to interest at 1%/1.5% per month under Section 201(1A) of the Income Tax Act 1961.
What financial statements should an RWA prepare annually and what format should they follow?
An RWA registered as a society should prepare an annual Receipt and Payment Account, Income and Expenditure Account, and Balance Sheet in accordance with the ICAI Guidance Note on Accounting by Not-for-Profit Organisations, which recommends fund-based accounting. The financial statements should disclose: member contribution collections (maintenance, sinking fund, water charges separately), expenditure on common area services, corpus fund, capital assets (generators, lifts, CC cameras), loans if any, and bank balances per account. An RWA registered as a Section 8 company must additionally comply with Schedule III of the Companies Act 2013 for financial statement presentation and must have accounts audited under Section 141 of the Companies Act 2013 by a Chartered Accountant. The accounts must be presented to members at the Annual General Meeting within six months of the financial year-end as required under Section 9 of the Societies Registration Act 1860 or Section 96 of the Companies Act 2013 as applicable.

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