This circular provides clarification on the availability of GST exemption on the upfront amount payable for long-term lease of industrial plots or plots for development of financial infrastructure under Entry No. 41 of Notification No. 12/2017–Central Tax (Rate).

The circular clarifies that doubts had been raised where the upfront amount for a long-term lease of thirty years or more is fixed at the outset but is payable in instalments over a period of time. After examination, it is clarified that the GST exemption applies to the entire upfront amount, irrespective of whether such amount is paid in one lump sum or in multiple instalments, provided the amount is determined upfront.

The exemption covers upfront amounts described as premium, salami, cost, price, development charges or by any other name, for long-term lease of industrial plots or plots for development of infrastructure for financial business. The exemption is available only when such lease is granted by the State Government, Industrial Development Corporations or Undertakings, or any other entity with 50% or more ownership of the Central Government, State Government or Union Territory.

This clarification ensures uniform application of the exemption and removes ambiguity regarding instalment-based payment of upfront lease amounts.