Mumbai: After several unsuccessful attempts over three years, Mumbai’s development authority, which oversees the city’s multi-crore infrastructure works, was finally able to lease two prime land parcels in the plush Bandra Kurla Complex (BKC) earlier this month.
The auction was made possible after the state government overcame a significant bureaucratic hurdle involving the notification of BKC as a central business district.
BKC, which falls under Mumbai Metropolitan Region Development Authority (MMRDA) jurisdiction, is like family silver which the government agency relies on to fund part of its infrastructure projects.
The MMRDA has been the special planning authority for BKC since 1977.
At present, the MMRDA has a number of projects in the offing such as the Sewri-Nhava Sheva Mumbai Trans Harbour Link, a Worli-Sewri connector, a network of Metro rail lines across Mumbai and several other projects in the extended Mumbai Metropolitan Region.
Auction for these two parcels of land in the BKC attracted 18 per cent Goods and Services Tax (GST) since the Maharashtra government never formally notified BKC as a ‘finance and business district’, driving the price of these already-costly parcels of land and spooking potential bidders, said a senior government who did not wish to be named.
“Eighteen per cent GST was a huge amount. The Union government, however, grants an exemption for central business districts. But to get that exemption, we had to issue a formal order for BKC,” the official told ThePrint.
He added that Centre is yet to issue an official order waiving GST for BKC land transactions. “But that is likely to happen soon,” he said.
“In all these years, we have always referred to BKC as a central business district, but it was never notified on paper as a financial centre. So, the [state] government issued a formal order granting BKC the tag. We are still awaiting an official word from the Centre on the exemption of GST, but by and large that issue has now been resolved,” the official added.
Over the years, BKC has emerged as one of Mumbai’s prime business districts, employing over two lakh people and hosting a range of government offices, multinational companies, five-star hotels, the National Stock Exchange (NSE) and a diamond bourse.
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Two plots to fetch over Rs 2,000 crore
MMRDA Commissioner S.V.R. Srinivas told ThePrint that the two commercial plots in BKC — spanning 5,800 sq m and 6,077 sq m — have been leased to Goisu Realty Private Limited, a unit of Japan’s Sumitomo Corporation, for a period of 80 years and will fetch the MMRDA a total of Rs 2,067 crore.
“There were several things that the bidders were considering. The application of GST was one major issue. That will be resolved now,” Srinivas said.
The MMRDA had been trying to lease the plots since September 2019. But the authority got no response from the market owing to the GST issue, along with Covid-induced slowdown in the real estate sector.
Tenders issued in mid-2019 were subsequently cancelled before bids were re-invited earlier this year.
According to pre-bid documents that ThePrint has seen, potential bidders had cited the application of GST as one of their concerns. Maharashtra government, taking note of the reservations expressed by bidders, issued a notification in July this year identifying BKC as an “International Finance and Business District”.
However, despite steps taken to clear the GST hurdle, Goisu Realty ended up being the only bidder for the plots. In July 2019, Goisu Realty had leased another major land parcel of about three acres in BKC for Rs 2,238 crore.
(Edited by Amrtansh Arora)
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Source: The Print
