In this post we will discuss the following two topics:
- Whether GST is applicable on the sale or purchase of land in India?
- Whether the applicability of GST on the sale/purchase of land is influenced by the intended end use of the land. The intended end use of the land could be the construction of a house property to be used as a residential dwelling by its owners or be let out. It could also be the intention of the purchaser to use the land for the purposes of his business like constructing a workshop therein or he might have purchased the land with the intention of re-selling it in future.
Applicability of GST on Sale or Purchase of Land.
Simply put, no GST is applicable on the sale or purchase of land. Also, the specific end use of the land has no bearing on the applicability of GST on the sale or purchase of land.
Note that Schedule III of the CGST Act, lists out the activities or transactions which shall be treated neither as a supply of goods nor as a supply of services under the Act.
As per entry no. 5 of the said Schedule III of the CGST Act, sale of land is an activity which can be considered neither as a supply of goods nor as a supply of services. Hence there is no applicability of GST on the sale or purchase of land as this activity has been specifically excluded from the purview of the GST Act.
Moreover, since GST is not applicable on the sale of land, its consequent end use has no bearing whatsoever in determining the applicability of GST.
So whether you have purchase a land to construct a house for residential use or to be let out or simply with the intention of selling the plot of land in the future, there is no applicability of GST on such purchase of land.