GST on leased land

[Kaustubh Karandikar]

XYZ Pvt. Ltd. Wants to buy land on lease from Maharashtra Industries Development Corporation (MIDC).

1) Will the MIDC charge GST against this purchase?

2) Is XYZ required to pay GST on it under reverse charge?

AI Summary

XYZ Pvt. Ltd. to Pay GST on MIDC Land Lease; Monthly Rentals Taxable, Not Covered Under Reverse Charge XYZ Pvt. Ltd. is considering leasing land from the Maharashtra Industries Development Corporation (MIDC) and seeks clarification on GST implications. It is confirmed that MIDC will charge GST on the lease. If MIDC qualifies as a governmental entity, XYZ must pay GST under reverse charge, but MIDC is not considered a government or local authority, thus not covered under reverse charge. Leasing is classified as a supply of services, and while upfront premiums for long-term leases may be exempt, monthly lease rentals are not. Additionally, transferring lease rights during a business sale may incur GST liability.