GST on sale of factory

[Kaustubh Karandikar]

XYZ is owner of one factory located at MIDC. XYZ is selling that factory along with all the assets in the factory for a lump sum amount. The factory is situated on land taken on lease from the MIDC. Now, there will be two types of sale for GST purpose: -

1) Sale of factory building along with its assets. (Assets include Plant & Machinery, F&F, electrical installation etc)

2) Sale of leasehold rights of the land on which the factory building is standing.

Need clarity regarding GST implications on sale transactions mentioned in both the above points along with valuation methodology to be followed.

[Padmanathan KV]

One should try exploring the possibility of treating the transaction as "service by by way of transfer of a going concern" which is exempt under Sl No 2 of Notification No 12/2017-Central Tax Rate:

2

Chapter 99

Services by way of transfer of a going concern, as a whole or an independent part thereof.

Nil

Nil

[Shilpi Jain]

If there is mere sale of assets it would be liable to GST and would be liable to GST at applicable rate for sale of the assets.

Completed land and building - no GST.

However, if it is a sale of the business as a going concern, only then it would be exempt.

[GUNASEKARAN K]

Sale of Plant & Machineries – Liable to GST

Sale of Factory Building – Transfer of ownership under Indian Registration Act subject to other Taxes, such as Stamp Duty

Sale of Leasehold rights - If the leasehold rights are treated as land itself, no tax would be applicable on its assignment. On the other hand, if the said leasehold rights being benefit arising of land is treated separate from land, then the same would be treated as a supply which liable to GST

Sale of business as going concern - "Services by way of transfer of a going concern, as a whole or an independent part thereof, attracts nil rate of GST"

AI Summary

XYZ's Factory Sale: GST Exemption for Going Concern Transfer; Asset-Only Sales Subject to GST. Leasehold Rights Vary. XYZ is selling a factory, including assets and leasehold land rights, and seeks clarity on GST implications. Responses suggest treating the transaction as a 'service by way of transfer of a going concern,' which is GST-exempt. If only assets are sold, GST applies at the applicable rate. Completed land and building sales are not subject to GST. The sale of leasehold rights may be GST-exempt if treated as land, otherwise, it is taxable. The sale of the business as a going concern attracts a nil GST rate.