The Chamber of Small Industry Associations (COSIA) has been actively advocating against the imposition of Goods and Services Tax (GST) on the assignment of leases in MIDC (Maharashtra Industrial Development Corporation) and other SIDCs (State Industrial Development Corporations). This issue has been a significant concern for MSMEs (Micro, Small, and Medium Enterprises) for the past three years. COSIA has repeatedly raised its concerns with the Hon’ble GST Council and the Union Ministry of Finance, stressing that the GST burden on lease assignments in industrial areas is detrimental to MSMEs.
In a landmark development, the Hon’ble Gujarat High Court passed a judgment on 3rd January 2025, ruling that GST cannot be levied on the assignment of leases in SIDCs (with the case involving GIDC plots in particular). This decision provides a major relief to MSMEs, who have been adversely impacted by the additional tax burden.
Impact on MSMEs
The imposition of GST on lease assignments has significantly harmed MSMEs, with approximately 80% of affected plot holders being from the sector. The cascading effect of GST, compounded by the non-availability of Input Tax Credit in most cases, has rendered investments in MIDC/SIDC plots increasingly unviable. Additionally, the burden of stamp duty adds further strain on MSMEs, making it difficult for them to sustain and grow in these industrial areas.
COSIA’s Appeal to the Government
In light of the Gujarat High Court’s ruling, COSIA urges the Government of India to refrain from challenging the decision. Instead, we call upon the government to prioritize the long-term sustainability of MSMEs, which are vital to India’s economic growth. MSMEs face numerous challenges, and this issue is a nationwide concern affecting enterprises across the country.
COSIA has requested the Government of India to issue a clear and definitive clarification on this matter, ensuring that MSMEs are not left in a state of confusion. Furthermore, we encourage the government to take steps to support MSMEs by addressing the GST issue and offering relief to those affected.
