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Question ID : 44516

GST liability in Joint Development Agreements

The land owner entered into a JDA with the developer for construction of ten flats, five flats each. Should the Land owner pay GST on his share? If so what is the value of supply(Construction cost or land plus construction cost). If so at what rate? The land owner wants to retain his share and does not want to sell them. If the land owner is not willing to pay the GST, should the developer pay the GST on his behalf? If so should it be paid as RCM or regular GST showing owners share as turnover?

Posted by Y.KANAKAMAHALAKSHMI on Jul 19, 2023

Filed Under GST

Answer ID : 85338

Assumption JDA is on or after 01.04.2019 for Residential Real Estate Project: GST on Landowner share: In the JDA, for the area sharing arrangement, Developer would give ceratin number of apartments to Landowner as a consideration for receiving the development rights from the Landowner. Taxability: Now, to the extent of flats given by the Developer to the Landowner, it is said that 'Construction services' are provided by Developer to the Landowner and GST is payable on the same. GST Rate: 1.5% [Affordable] or 7.5% [Non-Affordable residential apartments] Value of supply: There is a deemed valuation provided for the construction services provided by Developer to the Landowner in Notificaton 03/2019-CT(R), which provides 1st sale value charged by developer nearest to the date of JDA for the similar apartment from the unrelated customer, with 1/3 land deduction. This value per sq,ft would be multiplied with the Landowner share for computing the GST liability. Time of supply: Developer shall desposit the GST on this transaction under Forward charge with the Govt on or before the receipt of completion certificate or first occupation which ever is earlier.

Posted by SREENIVASULU THULASIRAM on Feb 25, 2024