Transfer of MIDC plot to third party under GST scanner

► Date : Jan 26, 2023


Businesses that have transferred plots in MIDC's industrial estates to others may soon be visited by the taxman. The central GST department is currently collecting 18% duty on such transactions.


The transactions are structured as leases, which are taxed as services. Since the implementation of GST in 2017, all such transfers have been subject to the tax demand.


Tax consultants have questioned the department's inaction over the last five years, as well as its sudden awakening on the issue, fearing that it will cause ripples among businessmen.


Since July 2017, the Directorate of GST Intelligence (DGGSTI), which combats duty evasion, has been collecting data on such transfers.


The original allotment by MIDC is exempt from GST. However, if the individual allottees lease the land to others, the land becomes taxable.


According to the DGGSTI communication to MIDC, it has been verifying plot transfer cases since July 2017 to determine whether the transferor has paid the tax or not.


According to sources, it is not uncommon for businessmen to seize plots and then sell them at a profit. The transfer charges are based on the difference between the new and old MIDC rates. Plots, on the other hand, are much more expensive.


► Tags : #tax #MIDC #gst

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