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

Reverse charge on development rights depends on whether a promoter takes FSI for construction or transfers it to a builder. RCM liability for Additional FSI/Development Rights hinges on the grantor and recipient: entry 6B applies if a promoter takes FSI for construction; if the landowner transfers FSI to a builder, RCM may not apply to the landowner. Government services in granting FSI may be separately liable under RCM.