Real Estate Giants Pay Over Rs 1,500 Cr In GST For Royalty Receipts
Numerous real estate companies across India have collectively paid more than Rs 1,500 crore in Goods and Services Tax (GST) to the government in recent months for intra-group transactions related to royalty payments for the usage of brand names.
According to reports, several real estate firms received notices from the government, prompting them to settle outstanding GST dues over the utilisation of the brand names of their parent companies.
The notices were issued as part of an effort by authorities to ensure compliance within the real estate sector. Many real estate companies operate under a special purpose vehicle (SPV) model, where each project is undertaken within a separate SPV.
The government contends that the use of the parent company's brand, including its name and logo, by these SPVs should be subject to an 18% GST, considering it as a service being rendered.
Prominent real estate entities that have paid GST in response to these notices include Tata Realty and Infrastructure, Tata Housing, Jindal Realty, DLF, and Vatika Group, among others. Among them, the Tata group companies have reportedly contributed the highest amount, exceeding Rs 100 crore, according to reports.
This development follows earlier reports from November 2023 when the Directorate General of GST Intelligence (DGGI) issued notices to various real estate companies, urging them to pay GST for a range of transactions involving group companies or joint venture partners.
The move was perceived as part of a broader strategy to expand the tax net within the real estate sector.
The payment of significant GST amounts by these real estate giants underscores the government's commitment to ensuring tax compliance and addressing potential revenue leakages.
As the real estate industry navigates evolving regulatory frameworks, this development is likely to have ripple effects on industry practices, financial considerations, and compliance measures across the sector. The proactive approach of the authorities signals a tightening grip on GST compliance within the real estate domain.
