A 2022 directive from the Goods and Services Tax (GST) department has become a major issue for businesses. Approximately 800 businesses have received notices for the recovery of around ₹7,000 crore in GST related to land transactions within Maharashtra Industrial Development Corporation (MIDC) areas.
The 18% GST recovery, which is being applied retroactively from 2017, has particularly affected entrepreneurs running micro, small, and medium enterprises (MSMEs). To seek relief, the Chamber of Small Industries Association (COSIA) has filed a writ petition in the Bombay High Court.
COSIA’s national president, Sandeep Parikh, and Vidarbha president, CA Julfesh Shah, stated that there are 260 industrial areas under MIDC in Maharashtra, with nearly 80% of MSMEs receiving notices related to land transactions. The GST, which came into effect in 2017, requires recovery on MIDC plot transfers or assignments since then. The tax is being recovered from the sellers, totaling a cumulative Rs. 7,000 crore across the state.
The agreements made during MIDC land sales do not include any clause for GST payment, putting a financial burden on the sellers. Shah highlighted that sellers are receiving notices and summons, with some facing account freezes, which is disrupting their business operations.