Do I Have to Pay GST on Land Purchase?

GST or Goods and Services Tax is levied on almost everything and one needs to pay them in time to avoid getting into trouble in the future. Often people ask do I have to pay gst on land purchase since nowadays, buying land or properties is of great value and they know, if you sell the property after 10 to 20years, the price can double and hence want to buy land and keep them as their asset. My father too purchased a land since he believes, not all money should be kept in bank. The interest rate in banks nowadays is quite low so buying land can be advantageous for the future. I have got to know several things regarding when and why one must pay gst on land purchase so let me tell you what I know.

The answer to people’s ur query about Is there gst on land purchase is No. Such tax is levied on goods and a plot can never be considered as a good. My father did not pay any money as GST but of course the Stamp Duty is to be paid.  The GST on land purchase should be given as per the following services:

• Any lease, tenancy, easement and licence to occupy the land

• Any agreement or letting out of the building be it a commercial, industrial or residential complex for business commerce, either fully or partially

But also do remember that one has to pay GST for purchase of developable plots. However I would also suggest you to ask some legal experts about this if you have any doubt since buying a land is not a joke and before investing, you must be aware of every aspect.

I hope I have answered when you have to pay GST on land purchase.

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Hello there, pal!

I work as a real estate attorney. I have a thorough understanding of land laws. As a result, if you're wondering, "Do I have to pay GST on land purchase?", Then I'd like to point out that, prior to GST, VAT was levied on the sale of goods, which were defined as all types of moveable property. Land, being an immovable property, was exempt from VAT. Stamp duties, on the other hand, were imposed on the sale of immovable property.

I'd want to provide you with an overview of the different effects of GST on land purchase, sale, lease, and rental, among other things.

• Exemptions and Taxability of Land Sales Under GST

Land is a non-movable asset. A land sale is not considered a sale of goods or a provision of services under Schedule III of the CGST Act. Land sales are only subject to stamp duty. Land sales are exempt from GST and do not need payment of the tax.

I think this answers your query about, ‘Do I have to pay GST on land purchase?’

The Gujarat Advance Judgement Authority clarified this in its ruling, stating that GST is not applicable on property sales unless the transaction is solely for the transfer of land ownership.

If a builder constructs a structure without taking any advance against the agreement and then sells it after receiving a completion certificate from the competent authorities, the builder is not liable for GST and is not entitled to collect ITC on inward supplies of goods and services.

• The impact of the GST on a developed land plot:

According to Schedule III of the CGST Act, 2017, the sale of land is exempt from GST because the transaction is solely for the transfer of ownership of land, which is an immovable item. The nature of the transaction, in this case, should be limited to the selling of a plot.

However, if the plot seller includes essential amenities such as a water line, drainage line, power line, land levelling, and so on, the transaction is considered a supply of services. As a result, the substance of the agreement between the two parties is critical. If the seller charges based on the super built-up area rather than the exact square footage of the plot, it is considered that he is collecting fees for land and standard utilities such as roads, drainage, and water lines, among other things. Such transactions are classified as the sale of a developed plot, which entails the provision of services rather than the sale of land.

• Implications of the GST on Land Renting and Leasing:

The term "supply" in the context of GST refers to any sort of sale, transfer, barter, exchange, lease, rental, or disposal of goods or services for a consideration by a person in the course of business. As a result, it is apparent that both renting and leasing of land are considered supplies under GST and are therefore taxable.

Any lease, tenancy, or permission to occupy land is treated as a provision of service under Schedule II of the CGST Act.

A one-time premium paid for a long-term lease (30 years or more) of land is subject to 18 percent GST, according to a judgement by the Bombay High Court.

are also subject to 18 percent GST.

However, the following types of land leasing are tax-free under the GST:

• Amount paid upfront in the case of a long-term lease of industrial plots or plots for the construction of financial infrastructure granted by the Central or State Government or any other enterprise owned by the Central or State Government to the tune of 20% or more

• Agro-machinery rental and leasing

• Renting/leasing any vacant land, with or without a structure, for whatever purpose

Thus, farmers leasing land for agricultural output and industrial plots for the development of financial infrastructure are free from GST. Leasing unoccupied land for commercial purposes, on the other hand, is taxable.

I hope this helps and provides you with an answer to your question, "Do I have to pay GST on land purchase?" 

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