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The Central Board of Indirect Taxes and Customs clarifies that Goods and Services Tax exemption applies to the upfront amount for long term lease of industrial plots or financial infrastructure plots even when paid in installments. This clarification applies under Entry Number 41 of Notification Number 12/2017 - Central Tax (Rate) dated 28 June 2017. The lease period must be thirty years or more. State Government Industrial Development Corporations or entities with fifty percent or more government ownership must provide the service to industrial units or developers. The total amount must be determined upfront for the exemption to apply.
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Circular No. 101/20/2019-GST
F. No. 354/27/2019-TRU Government of India Ministry of Finance Department of Revenue Tax Research Unit
North Block, New Delhi, Dated the $30^{\text{th}}$ April, 2019
To,
The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/ Commissioner of Central Tax (All) / The Principal Director Generals/ Director Generals (All)
Madam/Sir,
Subject: GST exemption on the upfront amount payable in installments for long term lease of plots, under Notification No. 12/2017 – Central Tax (R) S. No.41 dated 28.06.2017 -reg.
Representations have been received by the Board seeking clarification regarding admissibility of GST exemption on the upfront amount which is determined upfront but is paid or payable in installments for long term (thirty years, or more) lease of industrial plots or plots for development of financial infrastructure under Notification 12/2017 – Central Tax (R) S. No.41 dated 28.06.2017.
| Sl. No | Chapter, Section, Heading, Group or Service Code (Tariff) | Description of Services | Rate (per cent.) | Condition |
|---|---|---|---|---|
| (1) | (2) | (3) | (4) | (5) |
| 41 | Heading 9972 | “Upfront amount (called as premium, salami, cost, price, development charges or by any other name) payable in respect of service by way of granting of long term lease (of thirty years, or more) of industrial plots or plots for development of infrastructure for financial business, provided by the State Government Industrial Development Corporations or Undertakings or by any other entity having 50 per cent. or more ownership of Central Government, State Government, Union territory to the industrial units or the developers in any industrial or financial business area.” | NIL | NIL |
It is hereby clarified that GST exemption on the upfront amount (called as premium, salami, cost, price, development charges or by any other name) payable for long term lease (of thirty years, or more) of industrial plots or plots for development of infrastructure for financial business under Entry No. 41 of Exemption Notification 12/2017 – Central Tax (R) dated 28.06.2017 is admissible irrespective of whether such upfront amount is payable or paid in one or more instalments, provided the amount is determined upfront.
Difficulty if any, in implementation of this Circular may be brought to notice of the Board.
Yours Faithfully,
(Shashikant Mehta) OSD, TRU Email: shashikant.mehta@gov.in Tel: 011 2309 5547
