GST exemption for upfront lease premium on long-term industrial or infrastructure plots where notification conditions are satisfied.

An upfront amount payable for granting a long-term lease of thirty years or more may fall within the GST exemption in Sl. No. 41 of Notification No. 12/2017-Central Tax (Rate), as amended, where the prescribed conditions are met. The exemption covers amounts described as premium, salami, cost, price or development charges for services by way of granting long-term lease of industrial plots or plots for development of infrastructure for financial business. On a plain reading of the notification, such upfront consideration is not taxable when the conditions of the exemption entry are satisfied.

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Issues: Whether GST is applicable on the upfront amount payable for grant of long-term lease of thirty years or more in respect of plots.

Analysis: The exemption entry in Sl. No. 41 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended by Notification No. 32/2017-Central Tax (Rate) dated 13.10.2017, covers upfront amount described as premium, salami, cost, price or development charges payable for services by way of granting long-term lease of thirty years or more of industrial plots or plots for development of infrastructure for financial business, where the prescribed conditions are satisfied. On a plain reading of the notification, the authority found that the applicant's case falls within the exempted category if those conditions are met.

Conclusion: GST is not applicable on the upfront amount where the conditions in Sl. No. 41 of the above notifications are satisfied.

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