Reverse gst on payment to mcgm by mumbai real estate developers

This query is : Resolved

CA Kunjan - www.canaresh.com (Querist)
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15 December 2022 reverse charge applies to payments to mcgm by builder for
premium on fsi and
development charges?

i think yes, notificaiton 5 of 2019 for fsi and another notification for
reverse charege notification says "any service by any authority to any promoter " chargeable on rcm."

but most developers r not aware of this mcgm in mumbai attracts gst?

any inputs?

CA Kunjan - www.canaresh.com

CA Kunjan - www.canaresh.com (Querist)
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16 December 2022 during gst audit, reverse demand has come for exps incurred on mcgm by builder under government services notification of revberse charge.
now today, in dec 2022, can we get set off this reverse charges paid for fy2021 ?
i think no, as time to get set off was only till sep 21.
so in short, do i loose full set off of bills /expense incurred in fy2021 but not claimed then?

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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22 July 2025 You’ve raised two important points about GST reverse charge on payments to MCGM by Mumbai real estate developers:

1. Is Reverse Charge applicable on payments to MCGM for FSI premium and development charges?
Yes, reverse charge under GST is applicable on certain payments to municipal authorities like MCGM.

Notification No. 5/2019-Central Tax (Rate) and related notifications specify that services provided by government or local authorities to promoters/real estate developers are liable under reverse charge.

Premium on FSI (Floor Space Index) and development charges paid to MCGM fall under these services.

So builders must pay GST on reverse charge basis on such payments.

2. Can developers claim input tax credit (ITC) now for FY 2021 expenses on which reverse charge was paid but not claimed?
Unfortunately, the GST law has strict timelines for claiming ITC.

ITC must be claimed within due date of filing returns for September of the following financial year, i.e., for FY 2020-21, last date was around September 2021.

If not claimed within this period, ITC is generally disallowed and cannot be claimed later.

So if the reverse charge was paid in FY 2021 but ITC was not claimed timely, the set-off is likely forfeited.

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