The Odisha Finance Department has issued a clarification regarding the non-applicability of Goods and Services Tax (GST) on compensation paid for land and structural acquisition. According to the Central GST Act, 2017, and Odisha GST Act, 2017, the sale of land or buildings is neither considered a supply of goods nor a supply of services, thereby placing it outside the scope of GST.
The notice highlights a recent case where government authorities erroneously paid GST on compensation amounts provided to private landowners during the acquisition process. The department has emphasized that such payments are incorrect and unnecessary, urging all government departments and subordinate offices to ensure compliance with GST regulations.
All administrative divisions have been directed to disseminate this clarification to relevant offices under their jurisdiction. In case of any uncertainty, departments are advised to consult the Finance Department for further guidance. The circular has also been forwarded to key officials, including the Commissioner of Commercial Taxes and GST, Odisha, and other finance-related authorities, for necessary action.
GOVERNMENT OF ODISHA
FINANCE DEPARTMENT
***
No. FIN-CT1-TAX-0006-2025- 4654 /F
Date 11 /02 /2025
To
All Departments of Government/
All Heads of Department
Sub: Regarding non-applicability of Goods and Services Tax (GST) on compensation value paid for acquisition of land and structural work
Madam/Sir,
As per Central Goods and Services Tax Act’ 2017 and Odisha Goods and Services Tax Act’ 2017, sale of land / building is neither considered as supply of goods nor as supply of services. Accordingly, the same is outside the purview of GST.
However, it has been recently noticed in a particular case that GST has been paid by government authorities on the compensation amount paid to the private land owners in course of acquisition of land / building. This is completely erroneous as sale of land / building is outside the purview of GST.
This is for your kind information and necessary action. All subordinate offices under your administrative control may accordingly be intimated about this. In case of any doubt in the matter, Finance Department may kindly be consulted with.
Yours faithfully,
11.02.2025
Principal Secretary to Government
Memo No. 4655 /F; Date. 11/02/2025
Copy forwarded to the Commissioner of Commercial Taxes and GST, Odisha, Cuttack/ Director of Treasuries & Inspection, Odisha/ Director of Local Fund Audit, Odisha/Controller of Accounts, Odisha/ Director, MDRAFM/ Chairman, OSTT, Cuttack for information and necessary action.
Joint Secretary to Government
Memo No. 4656 /F; Date. 11/02/2025
Copy forwarded to all officers/ all branches of Finance Department for information and necessary action.
Joint Secretary to Government
