Funds for tenants in redevelopment plan to attract GST

In its recent order, the Authority for Advance Rulings (Maharashtra State) has held that compensation received by a tenant, covered by a redevelopment plan, for alternative accommodation during construction and any additional compensation for delayed possession of new premises will be subject to GST. The GST at 18% will have to be borne by the developer. This ruling may prompt developers to factor in tax cost and offer lower compensation. Based strictly on this ruling, every tenant participating in a redevelopment plan will have to register under GST and file returns. Also, tenants will indirectly face a financial impact.