New notices for GST on transfer of leasehold land stir real estate concerns
The issue of tax implications of transferring leasehold land has come to the fore once again as the authorities have started to issue notices to recover dues for such a transfer. This has sparked a significant debate among industry stakeholders as it is expected to have a major impact on future transactions and the broader real estate market.
The Goods & Services Tax (GST) authorities have recently issued these notices concerning the transfer of leasehold land. The crux of the issue lies in whether the transfer of leasehold land constitutes a sale of land or a service.
According to the tax authorities, such transfers qualify as a service, subjecting them to an 18% GST. This tax is levied in addition to the stamp duty already imposed by respective state governments, adding a financial burden to these transactions.
In India, industrial development corporations and other governmental bodies often transfer land parcels on a leasehold basis. These leasehold lands are sometimes sold by the original leaseholder to a new party.
