Whether GST under RCM is applicable on various fees and charges paid to local self government authorities such as, Muncipal corporation. etc.

[samiuddin ansari]

Dear experts,

I would like to have some clarification on subject as to whether GST reverse charge is applicable on development fees, amenities fees, welfare fees, premium floor space index (FSI) etc. charges paid by my friend doing business as developer towards approval of a commercial building plan to local municipal corporation. My friend, is having a firm engaged in developing a Commercial Building in the city, wherein, his building plan is already approved by Local Municipal Authority on 05.02.2020. Accordingly, he has also paid around ₹ 40 lakhs as various fees and charges (comprising of eminity fees, worker welfare cess, tree plantation & premium FSI). There is confusion over payment by various land Developers and Builders associations. The confusion is as per Govt. Notification No.05/2019 dated 29.03.2019 in which 18% GST is to be paid under RCM by the Builder/ Developer on aforesaid charges and fees paid during approval of building plan. However, on the other side, as per Notification No.12/2017 and also as per 12th Schedule of Article 243 W wherein charges/fees paid to Local Authorities such as municipal corporation remains exempted. Thus, we solicit your guidance supported with clarification by Board in the circulars and case laws judgments pronounced on such cases, if any, in to the matter as to whether it would be applicable to our commercial development or otherwise.

[Rachit Agarwal]

Services by Central Government, State Government, Union territory, local authority or governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243 W of the Constitution are exempted.

Twelfth Schedule [Article 243W of the Constitution

(Seventy-Fourth Amendment) Act, 1992]

1. Urban planning including town planning.

2. Planning of land- use and construction of buildings.

Hence in out view thes said services are exempted

[DR.MARIAPPAN GOVINDARAJAN]

In my view it is not exempted.

[samiuddin ansari]

Sir,

Is there any clarification or case laws on subject issue as to applicability of GST under RCM? if so, kindly provide the detials thereof.

[KASTURI SETHI]

In this scenario, Notification No.12/17-CT(R) dated 28.6.17 as amended is not applicable to your friend.

AI Summary

Developer Seeks Clarity on GST Reverse Charge for Municipal Fees Amid Conflicting Notifications and Legal Opinions A developer inquired whether GST under the reverse charge mechanism (RCM) applies to various fees paid to local municipal authorities for building plan approvals. The fees include development, amenities, welfare, and premium floor space index charges. There is confusion due to conflicting government notifications: one mandates an 18% GST under RCM, while another exempts charges paid to local authorities. Respondents offered differing views, with one suggesting exemption under Article 243W of the Constitution, while another disagreed. The developer seeks further clarification and case law references on the issue.