In case of continued sale of land / apartments by the landowner, he is required to pay taxes in 1% or 5%, depending on the type of residence, i.e. affordable or non-affordable category. However, if the developer has opted for an existing 8%/12% system, the landowner must opt for the same. (See FAQ of 14.05.2019). In addition, he has the right to invoke the ITC calculated by the developer against the transfer of the development right to land, both in the situation (old and in the new rates). According to the GST, the term „delivery“ u/s 7 is defined in a very broad term that also includes the exchange of goods or services, while the term „services“ is defined as something other than goods. In addition, entry No. 5 of List III of the CGST Act of 2017 excludes the sale of land from the supply. There is still a debate about the ability to control the transfer of development rights to the JDA, whether or not they are subject to the GST. The argument put forward is that the transfer of development rights is as good as the sale of immovable property and should therefore be outside the scope of the GST.

However, the government has consistently clarified its intent and, through communications/FAQs, etc., made it clear that the transfer of development rights from the landowner to a real estate developer is a taxable service. In addition, the AAR Maharashtra judgment was also delivered in the case of Vilas Chandanmal Gandhi dt. 15.01.2020 and also by AAR Karnataka in the case maarq Spaces Pvt. Ltd. (Order number. KAR ADRG/199/2019). Evaluate your analysis of GST`s commitments in JDA agreements. However, you have only considered an AREA SHARE agreement between landowners and developers. What are the consequences for GST if the agreement is a share in turnover? Years: Yes, of course, the GST must be paid. There is no exemption from such a monetary consideration, as it constitutes an essential element of the counterpart of the transfer of development rights.

Years: This will depend on the trigger point of the transfer of the right to development. If the land transfer took place before 01.04.2019, it is obvious that no RCM will be applicable. If this happened after 31.03.2019, RCM is applicable. For greater clarity, we refer to the answer to question No. 27 of the faQs of 7 May 2019, published by the government, which received a categorical answer. The owner of the land is required to collect 18% of GST on the provision of development rights. [S.No 16(iii) of Communication No 11/2017-CT (R) dt 28.06.2017] i. Transfer of planning rights from the landowner to the contracting authority. Under the Income Tax Act, the tax point u/s 45 (5A) is only after the completion of the project. Similarly, after 01.04.2019, the responsibility of the landowner`s GST will be transferred due to the transfer of the development right to the developer in the reverse charge mechanism. In addition, the point of taxation of it is made only after the completion of the project. .

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