TaxTMI 
TaxTMI 
Dear Sir
Whether RCM is applicable on Payment of Municipal Plan Approval Charges by the Builder to the Municipality.
RCM on Payment of Municipal Plan Approval Charges by the Builder
20 Oct 2019 
3 Replies 
7222 Views Asked by
Reverse Charge Mechanism may not apply to municipal plan approval charges when municipal services are tax exempt.
Whether the Reverse Charge Mechanism applies to municipal plan approval charges is debated; one view cites constitutional entrustment under Article 243W and an exemption notification suggesting non-application of reverse charge, while an authoritative FAQ states that services relating to regulation of land-use and building approvals entrusted to municipalities and provided by a governmental authority are exempt from tax, supporting a municipal services exemption rather than reverse charge liability. (AI Summary)
Whether the Reverse Charge Mechanism applies to municipal plan approval charges is debated; one view cites constitutional entrustment under Article 243W and an exemption notification suggesting non-application of reverse charge, while an authoritative FAQ states that services relating to regulation of land-use and building approvals entrusted to municipalities and provided by a governmental authority are exempt from tax, supporting a municipal services exemption rather than reverse charge liability. (AI Summary)