AMC to sell properties on sale deed instead of 99-year lease – GST

The civic body now has decided to sell all its newly constructed properties on sale deeds instead of auctioning it on a 99-year lease.

This is to avoid paying 18% goods and services tax GST on the auction of properties based on leased deeds. This policy, however, will not apply to open plots.

On Thursday, the Standing of the AMC, for the first time, will decided on selling eight shops in the newly constructed EWS scheme in Chandkheda at a rate of Rs. 1.21 lakh per sq. meter.

But what has surprised senior officials at the Ahmedabad Municipal Coroporation (AMC) is that on Tuesday the same civic body has published an auction notice inviting bidders to an auction of 68 shops with carpet area of 12,868 sq. m for Rs. 197 crore in the newly constructed Sindhu Bhavan parking complex on a 99 year-lease, where it will have to pay Rs. 36 crore as GST.

Over the past few years, the AMC had earlier auctioned four plots on a 99 year-lease for Rs. 240 crore.

However, the state government’s SGST department had directed the AMC to deposit 18% GST, which works out to Rs. 43 crore, since the deals was in the form of a lease deed. The issue is still being disputed with the state GST department. While the issue at GST was still being debated. In May this year, the AMC received a letter from the Gujarat Chapter of Confederation of Real Estate Developer’s Associations of India (CREDAI) requesting that the AMC sell its constructed properties with sale documents instead of lease deeds. The RMC then brought out a resolution to follow AUDA’s policy of selling properties on a sale deed instead of auctioning its constructed properties on a 99 year lease.

“Three years back, Auda had sold three plots in the western part of the city for Rs. 163 crore based on a sale deed. These plots were in Prernatirth Derasar at a rate of Rs. 134/- lakh per sq m, a plot right in front of Zydus Hospital for Rs. 75.9 cr and a plot on new CG Road for Rs. 36 crore.”

Source: THE TIMES OF INDIA