RCM on TRD/ Development Rights and Additional FSI

[Vineet Agrawal]

In many cases, Building plans are sanctioned in the name of the Landowner. Further, the Application for additional FSI as per local laws is also applied and obtained in the Landowner's name.

Question: Does the Landowner promoter become liable for GST under RCM as per Notification No. 5/2019-Central Tax (Rate), since he is also a promoter as per RERA and the additional FSI is granted to him by the authorities?

The development agreement is entered at a later stage.

[Shilpi Jain]

FSI is given by whom? Is it Govt?

Also, under entry 6B of the IGST RCM rate notification, RCM is applicable only if the person taking FSI is by a promoter and such FSI is taken for construction.

In present case LO will transfer the FSI to a builder? then no RCM

But as govt services may be liable under RCM.

AI Summary

GST Reverse Charge Mechanism Applies to Landowner Promoters Acquiring FSI for Construction, Not for FSI Transfers to Builders A query was raised regarding the applicability of GST under the Reverse Charge Mechanism (RCM) for a landowner promoter who obtains additional Floor Space Index (FSI) in their name and later enters a development agreement. The question centered on whether the landowner becomes liable for GST under Notification No. 5/2019-Central Tax (Rate). The response clarified that RCM applies if the FSI is taken by a promoter for construction purposes. However, if the FSI is transferred to a builder, RCM may not apply, though government services might still be liable under RCM.