CBIC issued clarification on S. No.41 of Notification 12/2017 – Central Tax (R) dated 28.06.2017 i.e One time upfront amount (called as premium, salami, cost, price, development charges or by any other name) leviable in respect of the service, by way of granting long term (thirty years, or more) lease of industrial plots, provided by the State Government Industrial Development Corporations or Undertakings to industrial units.
CBIC receives representation regarding clarification on admissibility of GST exemption on the upfront amount which is determined upfront but is paid or payable in installments for long term (thirty years, or more) lease of industrial plots or plots for development of financial infrastructure.
CBIC clarified that GST exemption on the upfront amount (called as premium, salami, cost, price, development charges or by any other name) payable for long term lease (of thirty years, or more) of industrial plots or plots for development of infrastructure for financial business under Entry No. 41 of Exemption Notification 12/2017 – Central Tax (R) dated 28.06.2017 is admissible irrespective of whether such upfront amount is payable or paid in one or more instalments, provided the amount is determined upfront.
One time Upfront amount means amount should be one time payable but it can be paid in installment. For Example. Upfront amount is 2 Lacs, it can be paid in lump-sum or 2 Lacs in installments (Say Rs. 20000 in 10 installment. then no tax.
In Simple Words
Upfront Amount (called as premium, salami, cost, price, development charges or by any other name) payable for long term lease (of thirty years, or more) of industrial plots or plots for development of infrastructure for financial business is exempt from GST whether it is paid in lump-sum or payable in installment.