The leasing of land, renting of building as well as equated monthly installments (EMIs) paid for purchases of under-construction houses are eligible for tax credit under the proposed Goods and Services Tax (GST) regime. This system will commence from July 1, when the GST is implemented. However, sale of land and buildings will be out of the GST ambit. Purchase of land, payment of stamp duty will continue as before, while electricity is also excluded from the GST scope.
The government is planning to roll out GST from July 1, 2017, it will subsume central excise, service tax and state VAT among other indirect levies on manufactured goods and services. According to the Central GST (CGST) bill any lease, tenancy, easement, licence to occupy land will be considered as supply of service. Also, any lease or letting out of the building, including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services as per the CGST bill. The GST bills provide that sale of land and, sale of building except the sale of under construction building will nether be treated as a supply of goods not a supply of services. Thus, GST can't be levied in those supplies.
In the earlier draft of the bills, 'Goods' were defined as every kind of movable property other than money and securities but includes actionable claim. 'Services' were defined as anything other than goods. It was thought that GST may be levied on supply of immovable property such as Land or building apart from levy of stamp duty. But now the situation is clear with the bill introduced in Parliament.