GST is applicable on compensation received by tenant for delayed possession of new premises: AAR

GST compensation received by tenants for delayed possessions of new premises

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GST is applicable on compensation received by tenant for delayed possession of new premises: AAR

GST : Amount received by tenant of building premises towards alternate accommodation or delayed possession of new premises would be receipt of amounts for doing an act i.e. vacating premises for redevelopment as well as tolerating construction cum redevelopment work till possession of new redeveloped premises and further for tolerating an act of not having completed redevelopment period within time, same would be a ‘supply’ and therefore, GST to be levied on such amount.
• The applicant was a tenant in building premises. The owner of said building premises entered into an agreement for redevelopment of said premises with a developer ‘S’. Consequent to the said redevelopment agreement, the applicant was required to vacate the premises to facilitate the redevelopment of the building, by the developer.
• In the process, the applicant has agreed to do an act i.e. vacating the premises to facilitate the supply of service by the developer to the owner and for vacating the said premises; the applicant has received / is to receive compensation from the developer.
• The receipt of amounts towards alternate accommodation or delayed possession of premises would be receipt of amounts for doing an act i.e. vacating the premises for redevelopment as well as tolerating the construction cum redevelopment work till possession of new redeveloped premises as per agreement and further for tolerating an act i.e the act of not having completed the redevelopment work within 36 months. In view thereof, the same would definitely be a ‘supply’ and therefore, there arises an occasion to levy GST on said amount.

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