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

Local authority exemption for FSI transfers may exclude GST, while reverse charge covers FSI-related construction services on unsold flats. Whether consideration for transfer of Floor Space Index (FSI) is a taxable supply: transfers by a municipal corporation performing urban planning, land use regulation and building construction control may qualify for local authority exemption; separately, transfers of development rights/FSI in the real estate sector attract reverse charge mechanism for services related to construction on unsold flats, with RCM confined to the unsold portion.