GST on supply of services of FSI by Municipal Corporation BMC

[Ashish Diwedi]

Dear SIr,

We have constructed parking lot and have received 2 FSI from the Municipal Corporation (i.e. BMC).

Is the transaction of supply of service by way of FSI liable to GST under RCM or is it exempt in terms of Noti. No. 12/2017 - Central Tax (Rate)?

[Shilpi Jain]

If it is a local authority and the function can be said to fall under 243W

1. Urban planning including town planning.

2. Regulation of land-use and construction of buildings

Exemption should be eligible.

[YAGAY andSUN]

Reverse Charge Mechanism on Real Estate sector (w.e.f. 01-04- 2019):- Description Of Service Tax Payable by Services supplied by any person by way of transfer of development rights or Floor Space Index (FSI) (including additional FSI) for construction of a project by a promoter on unsold flats by Promoter (However RCM is to the extent of unsold portion).

AI Summary

Debate on GST Applicability: Are Municipal Corporations' FSI Services Taxable or Exempt Under Reverse Charge Mechanism? A query was raised regarding the applicability of Goods and Services Tax (GST) on the supply of services involving Floor Space Index (FSI) by a Municipal Corporation. The question was whether this transaction is liable to GST under the Reverse Charge Mechanism (RCM) or exempt under a specific notification. One response suggested that if the function falls under urban planning or land-use regulation by a local authority, it may be exempt. Another response indicated that under RCM, GST is applicable on the transfer of development rights or FSI for construction projects, specifically concerning unsold flats by promoters.