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TMI BlogGST on Stamp DutyX X X X Extracts X X X X X X X X Extracts X X X X ..... GST on Stamp Duty X X X X Extracts X X X X X X X X Extracts X X X X ..... er GST is applicable on stamp duty or not, I would like to invite views on following points - 1. Stamp duty is essentially paid to State to validate certain documents to hold them good in law. Definition of services under GST is so vast, can it not cover activity for which stamp duty is collected? 2. Section 15(2)(b) includes "duties" also for valuation, so can we say here that Govt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;s intention was to cover stamp duty also? 3. SI. No 47 of NN 12/ 2017 covers only "service of registration under any law" which is essentially collected under "The Registration Act". But stamp duty is collected by states under states stamp act, e.g., "Maharashtra Stamp Act". How can it be said that stamp duty is covered by the exemption? 4. Any other arguments for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and against applying GST on stamp duty? Thank you in advance! Reply By KASTURI SETHI: The Reply: The following circular can be useful to you :- Tenancy rights taxability under GST -- Clarification Circular No. 44/18/2018-CGST, dated 2-5-2018 F.No. 341/28/2017-TRU Government of India Ministry of Finance (Department of Revenue) Central Board of Indirect Taxes & Customs, New Delhi Subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : Issue related to taxability of 'tenancy rights' under GST - Regarding. Doubts have been raised as to, - (i) Whether transfer of tenancy rights to an incoming tenant, consideration for which is in form of tenancy premium, shall attract GST when stamp duty and registration charges is levied on the said premium, if yes what would be the applicable rate? (ii) Further, in case of transfer of tena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncy rights, a part of the consideration for such transfer accrues to the outgoing tenant, whether such supplies will also attract GST? 2. The issue has been examined. The transfer of tenancy rights against tenancy premium which is also known as "pagadi system" is prevalent in some States. In this system the tenant acquires, tenancy rights in the property against payment of tenancy premium (p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agadi). The landlord may be owner of the property but the possession of the same lies with the tenant. The tenant pays periodic rent to the landlord as long as he occupies the property. The tenant also usually has the option to sell the tenancy right of the said property and in such a case has to share a percentage of the proceed with owner of land, as laid down in their tenancy agreement. Alterna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tively, the landlord pays to tenant the prevailing tenancy premium to get the property vacated. Such properties in Maharashtra are governed by Maharashtra Rent Control Act, 1999. 3. As per section 9(1) of the CGST Act there shall be levied central tax on the intra-State supplies of services. The scope of supply includes all forms of supply of goods and services or both such as sale, transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business and also includes the activities specified in Schedule II. The activity of transfer of tenancy right against consideration in the form of tenancy premium is a supply of service liable to GST. It is a form of lease or renting of property and such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activity is specifically declared to be a service in para 2 of Schedule II i.e. any lease, tenancy, easement, licence to occupy land is a supply of services. 4. The contention that stamp duty and registration charges is levied on such transfers of tenancy rights, and such transaction thus should not be subjected to GST, is not relevant. Merely because a transaction or a supply involves execu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of documents which may require registration and payment of registration fee and stamp duty, would not preclude them from the scope of supply of goods and services and from payment of GST. The transfer of tenancy rights cannot be treated as sale of land or building declared as neither a supply of goods nor of services in para 5 of Schedule III to CGST Act, 2017. Thus a consideration for the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id activity shall attract levy of GST. 5. To sum up, the activity of transfer of 'tenancy rights' is squarely covered under the scope of supply and taxable per se. Transfer of tenancy rights to a new tenant against consideration in the form of tenancy premium is taxable. However, renting of residential dwelling for use as a residence is exempt [Sl. No. 12 of notification No. 12/2017-Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax (Rate)]. Hence, grant of tenancy rights in a residential dwelling for use as residence dwelling against tenancy premium or periodic rent or both is exempt. As regards services provided by outgoing tenant by way of surrendering the tenancy rights against consideration in the form of a portion of tenancy premium is liable to GST. 6. Difficulty if any, in the implementation of this circular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be brought to the notice of the Board.
Reply By KASTURI SETHI:
The Reply:
Stamp duty is the liability of the buyer.
Reply By KASTURI SETHI:
The Reply:
Read serial no.4 of Circular F. No. 354/32/2019-TRU, dated 14-5-2019. X X X X Extracts X X X X X X X X Extracts X X X X
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