• Gst for development agreements


I am into constructing apartments after entering into Development agreement. 
1.Does such agreement attract any GST?

2.I am hearing builder should pay GST under RCM for owner share of flats. How much gst rate is applicable. Does it apply even after getting Occupancy certificate?

3. Does owner needs to pay gst on selling his share of flats in both cases, either with OC or without OC? Please let me know GST rate and Is it in addition to point 2 above.
Asked 8 months ago in GST

Dear Sir,


In reference to your query please note as follows:


In case of provision of development rights given by the landowner to the developer, the same is taxable under RCM on unsold units portion in the hands of the developer. The taxability of the same would depend on whether the same is for residential units / commercial units / mix of both.


In so far as RCM liability is concerned on the owner share of flats, the same in addition to above would depend on whether the agreement of consideration is on allocation / area sharing or revenue sharing basis.


The rate applicable would again depend on the type of project, i.e. in case of commercial projects 18% GST is applicable; however in case of residential projects 18% GST on unsold portion only would apply subject to cap of 1%/5% as applicable on the value of the said unsold flats.


In a nutshell:

1. The agreement will attract GST.

2. builder will be paying RCM, however on how much and what portion would depend on the terms agreed upon between the builder and Land owner as also on the basis of consideration.

3. Owner would need to pay GST if he sells his flat before OC. In case sale if effected after OC no GST is leviable however applicable reversal of ITC would arise.


Please advise in case of any further clarifications.


Thanks & Regards,

CA Aditya Dhanuka.

Aditya Dhanuka
CA, Kolkata
83 Answers
5 Consultations

5.0 on 5.0

Hi please find below asnwers


1. You will not have any GST on the share you are receiving towards developement agreement except income tax applicability


2. Yes since its residential scheme GST Will be paid by builder only. For any units remain unsold at the time of occupancy certificate GST will pe paid by builder under RCM


3. Flats you are receiving from builder will not attract futher GST.

Vishrut Rajesh Shah
CA, Ahmedabad
909 Answers
37 Consultations

5.0 on 5.0

Ask a Chartered Accountant

Get tax answers from top-rated CAs in 1 hour. It's quick, easy, and anonymous!
  Ask a CA