Curation Team
A demand for goods and services tax (GST) from Navaratna NBCC‘s escrow fund has had the Urban Development Ministry at loggerheads with the Finance Ministry. The issue relates to a redevelopment project at Kidwai Nagar in the national capital.
The Directorate General of GST Intelligence (DGGI) sought GST on the escrow fund maintained for the redevelopment of Kidwai Nagar project in the national capital from NBCC, the government’s building arm for civic amenities and housing, ET has learnt.
The GST demand notice was issued on January 29 on the grounds that lease receipts collected by NBCC under an escrow mechanism were liable for GST. The outcome from the case could have repercussions for other redevelopment projects. While GST officials argue that similar notices were sent to other realty developers, NBCC has maintained that its case is different. Its escrow account was established through a tripartite agreement and exempted payments from government departments and autonomous bodies from GST. NBCC did not respond to the queries sent by ET.
The Rs 5298 crore East Kidwai Nagar Redevelopment Project seeks to transform aging government housing into a state-of-the-art urban space. NBCC is also engaged in other redevelopment projects.
“NBCC says it was just an implementing agency, and the payments received from government departments are exempt from the GST,” a senior government official told ET.
The matter is now being examined in view of its wider implication and officials from both ministries may meet next week. The DGGI is yet to press ahead with the tax demand in view of these discussions.
The central Board of Indirect Taxes (CBIC) has been asked to investigate the issue in depth, another official said.
It could be taken to the fitment committee under the GST council, the official said.
