GST Exemption on Upfront Amounts for Long-Term Lease of Plots
<p><span>The Government of India has issued clarifications regarding GST exemption on upfront amounts payable for long-term lease of industrial plots or plots for financial infrastructure development under Notification No. 12/2017-Central Tax (R). The key highlights from Circular No. 101/20/2019-GST are as follows:</span></p><ol start="1"><li><span><strong>Applicability of GST Exemption</strong>:</span><ul><li><span>The upfront amount payable for long-term lease (30 years or more) of industrial plots or plots for financial infrastructure development is exempt from GST. This exemption applies whether the amount is paid in one lump sum or in installments, as long as the amount is determined upfront.</span></li></ul></li><li><span><strong>Qualifying Criteria</strong>:</span><ul><li><span>The exemption is applicable if the lease is provided by State Government Industrial Development Corporations, Undertakings, or entities with 50% or more ownership by the Central Government, State Government, or Union Territory to industrial units or developers in industrial or financial business areas.</span></li></ul></li><li><span><strong>Notification Details</strong>:</span><ul><li><span>The exemption is provided under Entry No. 41 of Notification No. 12/2017-Central Tax (R) dated 28.06.2017, which specifies that the upfront amount can be called by various names such as premium, salami, cost, price, or development charges.</span> <a href="https://cms.plasament.com/storage/circular-cgst-101.pdf">circular-cgst-101</a><br> </li></ul></li></ol>