BMC’s 450 crore credit notes under lens as no GST paid

The BMC’s controversial credit note policy, where payments to builders were made through credit notes worth Rs 450 crore for construction of 35,000 project-affected persons’ (PAP) tenements, is under the scanner for non-payment of GST.

Central GST sources said the BMC issued credit notes to builders. The builders sold these to others, including prominent city developers, who used them to settle their civic dues. Officials said they learnt that no GST was paid on these transactions.

“They were commercial transactions involving negotiable instruments (credit note), which attract GST of up to 18%. They are being investigated,” said a GST source. A BMC officer said he wasn’t aware of the GST issue, and that the onus of making such payments was on the builders.

“There was some departmental issue, after which it was decided that the finance department will issue the credit note in digital form.

The PAP scheme is good for the city, where we are constructing houses to settle people close to their areas, which help us clear the hurdles created by their structures for infrastructure projects.”