GST on Land Lease

The GST vide Circular No. 101/20/2019-GST dated 30th April, 2019 has clarified the applicability of GST on land lease. The confusion around GST on land lease arises as some may consider land lease to be a

supply of service. In India, GST is applicable on supply of services related to letting out of commercial property. Hence, to clarify the stance of the Government the following circular was issued.

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Applicability of GST on Land Lease

As can be gleaned from the above circular, GST is

NOT applicable on land lease. However, the exemption is subject to the conditions that the lease must be for a period of 30 or more years and the following:

The industrial plots or plots for development of infrastructure for financial business should be provided by the State Government, Industrial Development Corporations or undertakings or by any other entity having 50% or more ownership of Central Government, State Government, Union territory to the industrial units or the developers in any industrial or financial business area.

Thus, upfront amount (called as premium, salami, cost, price, development charges or by any other name) for land taken on lease from any of the above entities or undertakings for a period of 30 or more years will be exempt from GST.