Important Keyword: GST Notification 28/2019, long term lease GST India, industrial plot GST exemption, GST Council 38th meeting, land lease GST rules,
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Table of Contents
[F. No. 354/204/2019- TRU]
Government of India
Ministry of Finance
(Department of Revenue)
New Delhi, the 31st December, 2019
Notification No. 28/2019 - Central Tax (Rate): To amend notification No. 12/ 2017- Central Tax (Rate) so as to exempt certain services as recommended by GST Council in its 38th meeting held on 18.12.2019.
GST: [TO BE PUBLISHED IN THE GAZZETE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]
G.S.R....... (E).- In exercise of the powers conferred by sub-section (3) and sub-section (4) of section 9, sub-section (1) of section 11, sub-section (5) of section 15 and section 148 of the CGST Act, 2017 (12 of 2017), the Central Government, on being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby makes the following further amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No.12/2017- Central Tax (Rate), dated the 28th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 691(E), dated the 28th June, 2017, namely:-
In the said notification, in the Table, against serial number 41, -
- in column (3), for the figure “50”, at both the places where they occur, the figure “20 ” shall be substituted;
- for the entry in column (5), the following entries shall be substituted, namely, -
| (5) |
| “Provided that the leased plots shall be used for the purpose for which they are allotted, that is, for industrial or financial activity in an industrial or financial business area: Provided further that the State Government concerned shall monitor and enforce the above condition as per the order issued by the State Government in this regard: Provided also that in case of any violation or subsequent change of land use, due to any reason whatsoever, the original lessor, original lessee as well as any subsequent lessee or buyer or owner shall be jointly and severally liable to pay such amount of central tax, as would have been payable on the upfront amount charged for the long term lease of the plots but for the exemption contained herein, along with the applicable interest and penalty: Provided also that the lease agreement entered into by the original lessor with the original lessee or subsequent lessee, or sub- lessee, as well as any subsequent lease or sale agreements, for lease or sale of such plots to subsequent lessees or buyers or owners shall incorporate in the terms and conditions, the fact that the central tax was exempted on the long term lease of the plots by the original lessor to the original lessee subject to above condition and that the parties to the said agreements undertake to comply with the same.”. |
2. This notification shall come into force with effect from the 1st day of January, 2020.
(Ruchi Bisht)
Under Secretary to the
Government of India
Note: -The principal notification No. 12/2017 - Central Tax (Rate), dated the 28th June, 2017 was published in the Gazette of India, Extraordinary, vide number G.S.R. 691 (E), dated the 28th June, 2017 and was last amended by notification No. 21/2019 - Central Tax (Rate), dated the 30th September, 2019 vide number G.S.R. 734 (E), dated the 30th September, 2019.
📚 Frequently Asked Questions (FAQs): Notification No. 28/2019 - Central Tax (Rate)
Q1: What is Notification No. 28/2019 – Central Tax (Rate)?
Answer:
Notification No. 28/2019 – Central Tax (Rate) amends Notification No. 12/2017 to expand GST exemption on long-term lease of land (20 years or more) by State Governments or Government entities for industrial or financial activities.
Q2: From which date is Notification No. 28/2019 applicable?
Answer:
The notification is effective from 1 January 2020. Leases executed on or after this date can benefit from the revised exemption.
Q3: What was the earlier rule before this amendment?
Answer:
Earlier, GST exemption applied only if the lease period was 50 years or more. This limited eligibility for many industrial projects.
Q4: What is the new lease period required for GST exemption?
Answer:
The minimum lease period has been reduced to 20 years, making exemption accessible to a wider range of industrial and financial projects.
Q5: Which type of lease payments are exempt from GST?
Answer:
The exemption applies to upfront amount (one-time premium) charged for long-term lease.
👉 Regular annual rent may still attract GST, subject to applicable rules.
Q6: Who can grant such exempt long-term leases?
Answer:
The exemption applies when land is leased by:
State Governments
Government authorities
Government entities
Q7: For what purpose must the leased land be used?
Answer:
The land must be used only for the purpose for which it is allotted, i.e.:
Industrial activity, or
Financial business activity
within an industrial or financial business area.
Q8: Who ensures compliance with land-use conditions?
Answer:
The concerned State Government must monitor and enforce compliance as per its issued orders.
Q9: What happens if the land use is changed later?
Answer:
If land use is violated or changed:
Original lessor, original lessee, and subsequent buyers/lessees
All become jointly and severally liable to pay: GST that was exempted
Applicable interest and penalty
Q10: Do lease agreements need special clauses now?
Answer:
Yes ✅. All lease and subsequent sale/transfer agreements must explicitly mention:
That GST exemption was claimed, and
That parties undertake to comply with exemption conditions.
Q11: How does this notification help industrial development?
Answer:
By lowering the lease threshold to 20 years, it:
Reduces project cost
Improves feasibility of industrial parks & SEZ-like projects
Encourages long-term infrastructure investment
Q12: Does this exemption apply to private landowners?
Answer:
No ❌. The exemption applies only when the lessor is the State Government or a Government entity, not private landowners.
Q13: How should exempt lease transactions be reported in GST returns?
Answer:
Exempt supplies should be:
Properly documented
Disclosed as exempt supplies where required
Supported by lease agreements and State Government approvals
👉 Ensure accurate reporting with Finodha:
🔗 https://finodha.in/gst-return-filing/
Q14: Does this notification impact GST registration requirements?
Answer:
Indirectly, yes. Entities dealing only in exempt supplies may not need GST registration, but mixed supplies may still require it.
👉 Check your eligibility with Finodha GST Registration:
🔗 https://finodha.in/online-gst-registration/
Q15: Who should carefully review Notification No. 28/2019?
Answer:
This notification is crucial for:
Industrial park developers
Financial business hubs
Manufacturing companies
Infrastructure & logistics operators
👉 Get expert GST review from Finodha Professionals:
🔗 https://finodha.in/gst-compliance/
Conclusion✅:
Notification No. 28/2019 – Central Tax (Rate) strikes a balance between ease of doing business and strict land-use discipline. By reducing the lease threshold to 20 years, it broadens GST exemption while safeguarding revenue through strong compliance conditions.
📌 Key takeaway:
Long-term industrial leases are now easier—but compliance is non-negotiable.
👉 Stay compliant and project-ready with Finodha GST Experts
🔗 https://finodha.in/gst-compliance/
Download PDF: Notification No. 28/2019 - Central Tax (Rate)
More Information: https://taxinformation.cbic.gov.in/
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