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

Compensation for compulsory land acquisition not treated as consideration and thus not subject to GST
Additional sums paid on compulsory acquisition of land or buildings, described as 'extra money' or 'solatium', are payments of compensation and not consideration for a supply; because owners are compelled by law to transfer immovable property and there is no reciprocity between supply and payment, such amounts fall outside the GST 'supply' net and, together with Schedule III Entry 5 treatment of immovable property, are not taxable under GST unless a separate supply is shown.