RCM on Infrastructure charges paid to BMC

[vishwanath shetty]

Hello Experts, 

I would like to known the following, 

one of our client is involved in construction of residential and commercial buildings, 

They have paid Infrastructure charges and  Maharashtra Regional and Town Planning Development charges to BMC for constructing building for SRA project.

Are the liable to pay RCM on these charges, as Tax is to be paid in RCM for services received by government.

Please Advice 

[Shilpi Jain]

What is the purpose of payment of these charges? Are these permission charges for the plan?

If yes then not liable to GST as there is an exemption.

Also whether BMC is a local authority?

[KASTURI SETHI]

BMC is Govt. Entity and exemption to Govt. Entity stands withdrawn w.e.f  1.1.2022.

However, activities mentioned in Article 243 W of Constitution of India (Twelfth Schedule) are neither goods nor services. (NON-GST). See Notification No.14/2017-CT(R) dated 28.6.17 and 16/2018 CT (R) dated 26.07.2018.

[Sadanand Bulbule]

Yes Sirji.

[TANAY GHILDIYAL]

I agree with Shri Sethi Ji on this. 

AI Summary

Reverse charge mechanism on infrastructure charges hinges on whether the charge is an exempt permission fee or a non GST municipal function. Whether Reverse Charge Mechanism applies to infrastructure and development charges paid to the municipal corporation turns on the legal characterisation of the payment: permission or plan approval charges are exempt from GST, certain municipal functions are Non GST as they are neither goods nor services, and the municipal body's status as a government entity affects government entity exemptions; accordingly RCM applies only if the charge is a taxable supply to which government entity exemptions do not apply.