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GST for compensation paid to Farmers

RAMAPRASAD (MBA) (246 Points)

12 November 2017

Dear experts

We are electrical contractors carrying out transmission line works. In this work we have to pay compensation to farmers where ever our towers are installed and also crop compensation and will be collected from Our client.

Please let me is this payment attract GST

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4 Replies

g mahesh Mundra (Business and tax consultant) (3296 Points)
Replied 12 November 2017

I think compensation will not come under GST

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VIPIN GUPTA (PARTNER) (419 Points)
Replied 12 November 2017

my view if gst is payable it will be on reverse charge basis sev 9(3) is not applicable now sec 9(4) at present it is posponed. however if we gather the logic as give in press release 78/2017 the transaction is not in the furtherance of business so no gst

RAMAPRASAD (MBA) (246 Points)
Replied 14 December 2017

Mr. vipin
will it not be for a furtherance of business. We pay compensation to farmer for getting his NOC to install transmission line tower in his land. May be we consider this as taking his land on a lease

Actually I wanted to be completely certain and don't want to get notices from tax authorities

Vikas Gupta (Partner) (22 Points)
Replied 26 December 2017

Dear

The compensation is payable to farmer and in his hands it is not against furherance of business. Accordingly it is not taxable in his hands. Just like jewellery sold by a housewife to a jeweller.