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Question ID : 44574

Payment of GST by the owners in Development agreements

Sir in the case of a Development agreement to construct apartments on the site of the owner by a builder, how do we pay the GST on the owner's share of apartments. It is the onus of the developer to pay the GST on the owners share of apartments. How do we pay the GST. Should it be paid in RCM or DRC03 or Should it be shown as the turnover of the Developer and pay 18% GST on services of construction renedered to the owner? Kindly clarify.

Posted by Y.KANAKAMAHALAKSHMI on Nov 15, 2023

Filed Under GST

Answer ID : 85213

It depends on sale of apartments before or after completion. In one case Owner has to pay and in other the builder will pay under RCM.

Posted by VINAY BHARGAV KUMAR G on Nov 20, 2023
Answer ID : 85215


Posted by CA Shrawan Suthar on Nov 20, 2023
Answer ID : 85332

If the Joint Development Agreement is after 01.04.2019 the following would be relevant: In a JDA there would be following 3 limbs; 1. Transfer of development rights from landowner (LL) to developer. 2. Construction services provided by the Developer to Landowner (LL) 3. Sale of flats to end customers by LL or Developer to end customers. I understand that the JDA is an Area sharing arrangement, wherein the Landlord gets certain portion of the flats constructed by Developer. Now, we would examine the second aspect (2) as queried, Taxability: Developer is the supplier of construction services and the same is taxable under FCM, where developer shall collect from LL and deposit GST with Govt. Rate of tax: 7.5%- Non-affordable residential apartments- Without ITC 1.5%- Affordable residential apartments- Without ITC 18%- Commercial Apartments- With ITC Time of supply: Taxes shall be deposited with the Govt, before receipt of OC/CC [Notification 06.2019-CT(R)] Value of supply: First sale value charged by the developer to the unrelated end customer for the similar apartment, less 1/3 value deduction towards the land value, would be mutiplied with the Landowners carpet area. If the facts, change, taxability changes.

Posted by SREENIVASULU THULASIRAM on Feb 18, 2024