Do this on the server:

Configure the repository for group sharing.
This will effectively forcibly widen the umask for future Git operations.

cd /path/to/repository.git
git config core.sharedRepository group

Cleanup the existing permissions:

chgrp -R git .
chmod -R g=u .

Force group owner inheritance for new entries (not needed on BSD-style systems, but usually needed on other systems):

find . -type d -print0 | xargs -0 chmod g+s