No GST on Sale of Plots with Basic Infra
The Karnataka bench of GST – Authority for Advance Ruling (AAR) has held that GST is not applicable on the sale of plots even if these are sold after completing works related to basic necessities such as land leveling, and installation of sewage lines. It was clear that land is not subject to GST. However, an endless bout of litigation arose on whether the sale of plots when some basic developments have been carried out is subject to GST. The litigation is now easing. The circular states that even the sale of plots after some basic developments has been carried out is the sale of land per se and is not subject to GST. However, services availed of for developing the land-such as land leveling, laying of drainage lines, etc- will attract GST. However, services availed for developing the land- such as land leveling, laying of drainage lines etc-will attract GST. CBIC’s clarification and this advance ruling clear the air as regards GST applicability on the sale of land Typically plots are sold to individuals for building their own houses after some basic development has been carried out by the seller (land owner). The development of land includes the formation of roads, rainwater drains, laying of electricity cables, water pipes, sewerage lines, drilling of bore-wells, setting up of power -substations, and obtaining a connection from the electricity board. Without providing these basic necessities, the authorities would not grant permission to sell plots to individuals for the construction of houses. Apart from seeking a reply on the sites, she also enquired whether GST would apply to the sale of plots after the completion of works related to basic necessities and obtained a favorable reply about its non-applicability.
Tags : Karnataka GST Authority for Advance Ruling litigation plots necessities