ACQUISITION OF LAND & BUILDING. COMPENSATION.

[Sadanand Bulbule]

Dear all

Every one is aware that, the State Industrial Area Development Boards or any other such authorities acquire private land or building for the development of projects like Metro Rails, National Highways, Airports etc., and handover the acquired land/building to the developing agencies of the respective State Government and Union Government. Accordingly the owners of the land or the building are paid compensation as per the prevailing guidelines.It is also gathered that, many a times 'extra money' is also paid over and above the standard compensation.

In my understanding, the land or the building is essentially immovable property being specifically exempt from GST vide Entry No. 5 of Schedule III of the CGST Act.

Query:

Whether such 'extra money' can be termed as an act of tolerance for the purpose of Section 7 readwith Para 5[e] of Schedule II of the CGST Act? Is there any scope to bring that ' extra money' under the GST net?

Clarification by the experts is solicited.

AI Summary

GST Not Applicable on Extra Compensation for Land Acquisition; No Supply of Goods or Services Involved A discussion on the applicability of GST on additional compensation paid for land acquisition by state authorities, often termed 'extra money' or 'solatium,' is presented. Participants argue that such payments are not 'consideration' under the GST Act as they do not involve a supply of goods or services. The consensus is that compulsory acquisition does not constitute a supply, and therefore, GST should not apply to these payments. References are made to legal precedents and a specific circular, supporting the view that extra compensation is not taxable under GST.