In continuation to the series on Real Estate (RE)
sector, the current article is oriented towards the GST implications on
statutory / regulatory costs incurred by the RE developer during
construction of a project. This is significant on account of reverse
charge provisions which have been made applicable to RE promoters /
business recipients when availing services from Governments (Central /
State / UT or local authority). This article would be taking forward the
concepts laid down in the previous articles on reverse charge
provisions made applicable for RE developers (July 2023 issue) and
Government services (February 2019 issue).
BACKGROUND The
Indian administration operating under the executive function has been
designed under a multi-layered structure comprising the Union
Government, State Government, Municipality or Panchayaths and other
corporations, boards and committees. Primary functions of economic
development and social welfare have been assigned to these
constitutional bodies. Such bodies either perform the entrusted
functions under its own umbrella or form a board / corporation / entity
and assign those functions to such person (termed as ‘Instrumentalities
of State’). This is done with the purpose of better financial and
operational efficiency and autonomy in implementing the government’s
plans.
Section 9(3) of CGST/SGST Act, 2017 imposes tax on
reverse charge basis on recipient business
