• GST on JDA

Hello experts,We entered into JDA with a builder in 2016.My father is the lone owner of the land and we are two brothers.The builder has agreed to pay the Service Tax in respect of the landowners share.

But now GST has come and I have some question regarding that.

As per Notification No. 4/2018-Central Tax (Rate) New Delhi, the 25th January, 2018 it is saying that both landowner and builder has to pay GST once allotment letter is issued.

Now the builder is asking us to pay the GST (as he agreed to pay only Service Tax but GST rates are higher) for the construction service provided by him and we have to pay him at the time of taking possession.But my question is,although we pay for construction service to the builder are there any separate GST we need to pay by registering us(landowner) under GST for Transfer of Development Rights?If yes then, as per my understanding we are going to pay GST on the same flats received as consideration of JDA two times. One to the builder for his construction service and one for TDR (transfer of development rights).

Also how the tax will be calculated by the builder(on construction services) and by us(on TDR).
Please clarify.
Asked 4 months ago in GST from Chennai, Tamil Nadu
No, you are not required to pay GST on the transfer of development rights. 

GST is payable only for construction services. 

Please feel free to call/ revert in case you need more clarity.

Thanks and regards
Abhishek Dugar
CA CS B.Com
Abhishek Dugar
CA, Mumbai
3578 Answers
161 Consultations

5.0 on 5.0

Hi,

Hope you are doing well !

Yes, you are required to pay GST on the transfer of development rights.

Please find below the conclusion of notification No. 4/2018-Central Tax (Rate) New Delhi, the 25th January, 2018:

Taxability of joint development agreement under area-sharing arrangement was contentious on various counts, i.e. whether transfer of development right is taxable, and if so, how to determine the time and value of supply. The Notification No. 4 / 2018 – Central Tax (Rate) puts to rest such controversies by making it clear that the transfer of development rights is taxable, and the tax would be payable not on the date of execution of the joint development agreement, but on the date of transfer of possession evidenced by execution conveyance deed or allotment letter.

The Government has notified the 'time of supply' in case of transfer of development rights in exchange of construction services. As per the Notification No. 4 / 2018 – Central Tax (Rate) dated 25 January 2018, the date of transfer of possession or right in the constructed complex, by way of an instrument like a conveyance deed or allotment letter, shall be the time of supply of development right by the land owner to the developer. Such date of transfer of possession is also deemed to be the time when the construction services are supplied by the developer to the land owner.

Thanks & Regards,
Payal Chhajed
Payal Chhajed
CA, Mumbai
981 Answers
8 Consultations

4.8 on 5.0

Payal Chhajed
CA, Mumbai
981 Answers
8 Consultations

4.8 on 5.0

Hi,

Yes, every time landowner has to pay GST @18% on the development right given by the land owner to the developer.


Thanks & Regards,
Payal Chhajed
Payal Chhajed
CA, Mumbai
981 Answers
8 Consultations

4.8 on 5.0

As stated earlier, you are required to pay GST only once at the time of getting allotment letter/possession.
Abhishek Dugar
CA, Mumbai
3578 Answers
161 Consultations

5.0 on 5.0

No, you need not pay GST on the transfer of development rights. 

GST is payable only for construction services. 

Regards,
Nikhil.
Nikhil Khanna
CA, Mumbai
1375 Answers
17 Consultations

5.0 on 5.0

No...GST will only need to be paid once.
Nikhil Khanna
CA, Mumbai
1375 Answers
17 Consultations

5.0 on 5.0

Hi,

Land owner will be liable to pay GST for transfer of development rights as well as for construction.

Thanks & Regards,
Payal Chhajed
Payal Chhajed
CA, Mumbai
981 Answers
8 Consultations

4.8 on 5.0

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