GST Exemption on 90-Year Lease Premiums: Conditional and Not Considered Sale of Land

In re New Okhla Industrial Development Authority (NOIDA) (GST AAR Uttar Pradesh)

The Goods and Services Tax (GST) regime in India is intricate, with its applicability on various transactions often subject to specific conditions and interpretations. A recent ruling by the Authority for Advance Ruling (AAR) in Uttar Pradesh concerning the New Okhla Industrial Development Authority (NOIDA) sheds light on the GST implications for 90-year lease premiums. This article delves into the nuances of the ruling, offering a comprehensive analysis for stakeholders in the real estate and development sectors.

The AAR Uttar Pradesh examined the GST applicability on the upfront amount charged for granting a ninety-year lease of plots by NOIDA for the development of industrial infrastructure. The key points of consideration were whether such transactions are exempt from GST and if they constitute a sale of land, thus falling outside the GST purview.

1. GST Exemption on Lease Premiums:

The exemption hinges on specific conditions outlined in Entry No 41 of Notification No 12/2017-CT (Rate) dated 28.06.2017 (as amended) and the corresponding state notification. The conditions for exemption include:

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