TaxTMI 
TaxTMI 
XYZ is owning a factory which is situated on land taken on lease from the MIDC. XYZ is selling the entire factory along with assets and liabilities to PQR. In this process, XYZ is also selling the leasehold rights of the land on which the factory building is standing. GST authorities are asking to pay GST to the seller on transfer of leasehold rights. To avoid litigation if XYZ will pay GST on it, is PQR eligible to claim input tax credit on the same?
GST on sale of lease hold land
18 Feb 2024 
4 Replies 
5569 Views Asked by
Input tax credit restriction: transferee may be barred from claiming ITC on GST for transfer of leasehold rights.
Leases from a government owner may be non transferable without approval, a transfer as a going concern may be GST exempt, and while some commentators say a transferee can claim ITC when used in business, an advance ruling found that a transferee acquiring lease rights for construction could not claim ITC of GST paid by the transferor, invoking the statutory exclusion; professional legal advice was recommended due to fact sensitive considerations. (AI Summary)
Leases from a government owner may be non transferable without approval, a transfer as a going concern may be GST exempt, and while some commentators say a transferee can claim ITC when used in business, an advance ruling found that a transferee acquiring lease rights for construction could not claim ITC of GST paid by the transferor, invoking the statutory exclusion; professional legal advice was recommended due to fact sensitive considerations. (AI Summary)