DGGI Sends Notices to Real Estate Firms Demanding GST Payment for Intra-Group Transactions

• DGGI is sending notices to real estate companies for GST payment on transactions among group companies or joint venture partners
• The move is part of a strategy to widen the tax net for the sector
• Management services fees and royalty for brand names are among the services that DGGI finds taxable at 18%
• Tax experts are divided on the legal tenability of the current tax demands
• Real estate companies may have to pay GST on management fees and royalty charges
• The applicability of GST in the real estate sector is restricted to work contract services and purchase of under-construction properties
• DGGI is studying the matter of royalty charged by parent companies to their SPVs for using the brand name
• Transactions between related persons attract tax even when there is no consideration under the GST law
• Real estate companies typically operate on an SPV model, and the use of the brand by the SPVs may be subject to GST

Source: a2ztaxcorp.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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