Dear Sir,
Hope you are doing well !!
When a developer enters into a development agreement with a Landowner, GST would become payable by the Landowner when the developer transfers possession or the rights in the constructed complex, building or civil structure, to the Landowner by entering into a conveyance deed or allotment letter.
Hence, when the Landowner receives a constructed property from the Developer in exchange for providing land, the Landowner would become liable for payment of GST. The GST rate applicable on such a transaction would be 18%.
The actual GST rate for under construction flats, properties or commercial properties is 18%. However, 1/3 of 18% is deemed as the value of land or undivided share of land supplied to the buyer of the property. So effectively rate will be 12% with full ITC.
It should be calculated on fair market value of land.
Also, Supply of Construction Services by the Developer to Landowner (supplier of Development Rights) is a Supply for a consideration in the form of Transfer of Development Rights and therefore GST is payable by the Developer when he transfers possession of flats to the Landowner.
So, land owner as well as developer both are liable for GST.
Sale of Building after receipt of Completion Certificate is treated as neither goods nor service, that means not considered as supply and therefore GST is not applicable.
If you need any further assistance, please let me know.
Thanks & Regards,
Payal Chhajed