The Companies have dragged the government and the indirect tax department to court over goods and services tax (GST) levied on these deals in what could jeopardize long-term land lease deals. As per the current regulations, 18% GST is levied on any long term lease transactions, and industry trackers said the GST paid becomes pure cost as it cannot be used as an input tax credit in case the recipient wishes to construct any commercial building there. The companies filed a writ petition in the Rajasthan High Court demanding that either GST be removed from such transactions or they be allowed to claim the credit.
As of now, GST is levied on 99-year land lease and that becomes a cost as it cannot be set off if a hotel or any other commercial property is built on it. Most of such land is government-owned and leased to build hotels or ports.