Applicability of GST under RCM on compensation (solatium) paid as advance to SLAO(DM) for distribution to Project affected families(R&R)

[THDC India]

A Coal Block has been allotted to a PSU by Ministry of Coal, GOI and the land acquisition for the project is under advanced stage.

In this reference, R&R policy of Coal Mine Project has been approved by Commissioner, and is being implemented by District Authorities. 53.13 Ha Govt. Land of a has been allotted by District authorities for resettlement of eligible PAFs (Project Affected Families). PAF's are provided with the following options to choose from:

Constructed House in R&R Colony

Plot and ₹5 Lakhs in lieu for construction of house

₹7 Lakhs in lieu of house and plot

Collector informed that PAFs have given their option and further, directed PSU to deposit an advance against the benefit to be given to eligible PAF's as per approved R&R policy of . To be deposited deposited with Collector.

It is requested to confirm whether GST under RCM will be applicable in the subject case.

AI Summary

Indian PSU's Land Compensation for Coal Project Not Subject to GST Under Reverse Charge Mechanism A public sector undertaking (PSU) in India is involved in a coal block project requiring land acquisition, overseen by district authorities under a resettlement and rehabilitation (R&R) policy. Project Affected Families (PAFs) have options for compensation, including a constructed house, a plot with 5 lakhs, or 7 lakhs in lieu of both. The PSU must deposit an advance with the Collector for these benefits. A query was raised about the applicability of Goods and Services Tax (GST) under the Reverse Charge Mechanism (RCM) on this compensation. The response clarified that the compensation deposit is not subject to GST under RCM as it is not a consideration for any supply.