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Buyers to pay 18% GST on plots bought from AUDA & AMC

 For all this while, urban local bodies were under the impression that any plot sale or lease deed they execute is exempted from GST. This is not so.

For almost a year now state GST officials have been issuing notices to the Ahmedabad Urban Development Authority (AUDA) and the Ahmedabad Municipal Corporation (AMC), asking them to recover 18% GST from the buyer who bought a plot from these civic bodies last year.

“Several letters have been exchanged between AUDA, AMC and SGST over the issue, but the latter is adamant that if we execute a lease deed for 99 years or a sale deed, the buyer will have to pay GST on such deals to the civic bodies,” a senior SGST official told TOI on condition of anonymity.

The same condition will apply to the AMC. SGST officials have argued that GST is charged because a “premium” is charged from the leaseholder by the AMC or AUDA. This comes at a time when both the local body authorities are planning to auction plots after the assembly elections are over to generate income.

The insistence on 18% GST will have a drastic impact on AMC and AUDA’s prevailing policies of entering into long term lease agreements with organizations. “AUDA and AMC have replied to us that they are not responsible for collecting GST from leaseholders once the lease agreement has been executed,” adds the senior SGST official.

AMC officials say that the SGST notices will only force the local bodies to enter into sale agreements than lease agreements. “While GST is not charged on plots sold between private parties,” adds SGST official.

Over the past three years, AUDA had announced sale of six plots in the western part of the city, but only three plots were leased out for a 99-year period for Rs 163 crore owing to the Covid-induced slowdown in the real estate sector.

A plot near Prernatirth Derasar was leased for Rs 52 crore, another plot near the Zydus hospital was leased for Rs 75.9 crore and a third plot was leased for Rs 1.04 crore near the engineering college on New CG Road. Both AUDA and AMC have been asked to recover a GST of Rs 43 crore from the leaseholders, say SGST officials.

AMC, AUDA leased out plots for a total Rs 240 crore over three years. In July 2021, AMC auctioned a plot of 3,469 sq m to a major realtor for Rs 77.04 crore while another measuring 8,060 sq m of land was put for auction for Rs 151.76 crore, but later withheld.

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