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Real Estate के development के लिए, joint development arrangement का model एक popular model के रूप में उभरा है जिसमें land owner और developer अपने resources और efforts को जोड़ते हैं. एक typical joint development agreement के तहत, land owner अपनी land को contribute करता है और developer की लागत पर एक real estate project को develop करने और construct करने के लिए developer के साथ एक arrangement में प्रवेश करता है. इस प्रकार, land का योगदान land owner द्वारा किया जाता है और development और construction की cost developer द्वारा incur की जाती है.

Land owner को उनके बीच सहमत terms और conditions के आधार पर या तो lump sum consideration या percentage of sales revenue या certain percentage of constructed area in the project के रूप में consideration मिलता है.

Commonly joint development arrangement 2 types के होते है:

1. Revenue Sharing JDA

2. Area Sharing JDA

Taxability in the hands of landowner:

1. Landowner residential या commercial apartment’s के development के लिए अपनी land के development rights, developer को transfer करेगा.

2. Development rights के transfer करने पर, land owner को consideration प्राप्त हो सकता है, या तो money (i.e revenue sharing) के रूप में या share in built-up area (i.e area sharing) या दोनों के combination के रूप में.

GST on transfer of development rights by landowner to developer:

Landowner के द्वारा land के development rights को transfer करने को supply माना गया है. लेकिन इस transaction को reverse charge mechanism मे taxable किया गया है. इसलिए landowner को GST नहीं pay करना है, बल्कि developer को under RCM GST pay करना रहेगा.

Reference: Notification No. 05/2019-Central Tax (Rate) dated 29th March 2019

GST on Joint Development Agreement

GST on further sale by landowner of his share of area (under area sharing):

Landowner अपने share के plots/apartment sale करता है, जहा entire consideration completion certificate के issue होने के बाद receive होता है तो GST की applicability arise नहीं होगी क्योकि फिर यह Schedule-III के item 5 मे cover हो जाएगा.

In case अगर landowner under constructed apartment को sale कर देता है तो फिर sale of apartments पर GST की liability arise हो जाती है और landowner को GST pay करना रहेगा.

1. Taxability in the hands of Developer:

i. Landowner residential या commercial apartment’s के development के लिए अपनी land के development rights developer को transfer करेगा.

ii. Development rights के transfer करने पर, developer या तो money के रूप में (i.e revenue sharing) या share in built-up area (i.e area sharing) या दोनों के combination के रूप में भुगतान कर सकता है.

2. GST on transfer of development rights by landowner to developer:

Landowner के द्वारा land के development rights को transfer करने को supply माना गया है. लेकिन इस transaction को reverse charge mechanism मे taxable किया गया है. इसलिए developer को under RCM GST pay करना रहेगा.

3. Development rights given for construction of residential apartments:

Residential apartment construct करने के लिए development rights को transfer किया गया है तो इसे GST से exempt किया गया है, subject to the condition, सभी residential apartment के respect मे consideration, completion certificate या first occupation जो भी case हो, तक मिल जाना चाहिए.

However, अगर completion certificate या first occupation जो भी case हो, के दिन अगर कोई unsold residential apartment रह जाता है तो उस case मे proportionate basis पर development rights पर GST की applicability आ जाएगी.

Reference : Notification No.04/2019-Central Tax (Rate) dated 29th March 2019

Tax on transfer of development rights pertaining to unsold Residential Apartments on completion of project:

Lower of:

  • 18% on Value of DR/TDR/FSI* in proportion to carpet area of such unsold flats to total carpet area of residential flats; or
  • 1% affordable housing पर, 5% non affordable housing.

Reference : Notification No. 03/2019-Central Tax (Rate) dated 29th March 2019

Time of Supply & Value of Development Rights:

 Particulars

Time of supply Value of TDR
upfront fees payment  Earlier of :

I. issuance of completion certificate;or

II. First occupation of project

value of monetary consideration paid.
 Area Sharing Earlier of :

III. issuance of completion certificate; or

IV. First occupation of project

value of unsold flats: similar value charged by promotor nearest to date of completion certificate or first occupation.

Development rights given for construction of commercial apartment’s:

Commercial apartment construct करने के लिए development rights को transfer किया गया है तो इस case मे development right पर, developer को RCM मे GST pay करना रहेगा.

GST Rate on development rights for Construction of Commercial Apartment:

1. SAC Code – 9972

2. GST Rate – 18% on Value of DR/TDR/FSI/Lease

Brief: GST Payable by Developer Under RCM on Development Rights in JDA

Particulars Taxability
Construction of commercial apartments Value of Development Rights shall be deemed to be value of similar commercial apartments charged by promoter from Independent buyer nearest to date of transfer of Development Rights or FSI. Tax rate will be 18% thereof – Clause iii of Notification No.04/2019-Central Tax (Rate) dated 29th March 2019
Residential apartments remained unsold on completion 1. Tax payable will be lower of:

  • 18% of DR/TDR/FSI value attributable to unsold apartments; or
  • 5% or 1% of value of unsold apartments

2. Value of Development Rights shall be deemed to be value of similar apartments charged   by promoter from independent buyers nearest  to the date of transfer of DR/TDR/FSI and monetary consideration paid, if any;

3. Value of unsold apartments shall be deemed to be value of similar apartments charged by promoter nearest to date of completion or first occupation; or

 GST on construction service of apartments given to landowner by the developer for transfer of development rights:

Area sharing joint development arrangement के case मे जब developer apartments construct करके landowner को handover करता है, इस service को supply माना गया है जो इस पर GST की applicability आ जाएगी. इस case मे developer को forward charge mechanism मे GST pay करने की liability arise होती है.

Time of Supply for both Commercial & Residential Real Estate Project:

Completion certificate की issuance कि date या First Occupation, जो भी पहले हो.

Valuation of such construction services for both Commercial & Residential Real Estate Project:

Value development right या FSI transfer करने की nearest date को किया जाएगा, जिसे independent buyer से project के similar apartment के लिए जो total amount charge किया जा रहा है.

GST Rates: 1% affordable housing पर, 5% non affordable housing पर, 12% commercial apartments पर लगेगा. यह rates effective rate है, इस rate पर land के 1/3rd portion को deduct कर दिया गया है.

Applicability of ITC: Real estate projects मे Commercial Projects के case मे, Developer के द्वारा charge किया गया GST, landowner as a ITC claim कर सकता है only in case जहा landowner ने further इन्हें sale करता है और उस पर tax pay करता है जो ऐसे apartments के construction पर उससे charge किए गए tax के amount से कम नहीं है.

Conclusion:

  • Landowner के द्वारा जो development right को transfer किया जा रहा है commercial apartment के construction के लिए या Residential Complex जो completion certificate के बाद sale होते है के construction के लिए, उन पर 1st April 2019 या उसके बाद transfer करने पर developer को reverse charge mechanism मे tax का payment करना होगा.
  • upfront fees जिसे premium, salami आदि भी कहते है उस पर भी Promotor के द्वारा reverse charge mechanism मे tax का payment करना होगा.
  • developer के द्वारा जो apartments construct करके landowner को handover किए जाएँगे वो services पर भी GST payable होगा. इस case मे developer को GST pay करने की liability arise हो जाती है.
  • developer या landowner के द्वारा plots/apartment के sale करने पर, जहा entire consideration completion certificate के issue होने के पहले receive होता है तो GST की applicability arise हो जाती है और supplier को tax pay करना होता है. Under constructed apartment के sale होने पर GST applicable हो जाएगा.

Commercial/Residential units जिनके sale होने पर concessional rate 1% या 5% charge किया जा रहा है उस पर use किए गए input और input services पर ITC available नहीं है.

Conclusion:

In conclusion, the GST implications on Joint Development Agreements involve complexities for both landowners and developers. Reverse charge mechanisms, concessional rates, and input tax credit eligibility all play crucial roles. Developers need to navigate the reverse charge mechanism, while landowners must carefully consider the tax implications of the sale of developed properties. Understanding the nuances of GST on JDAs is essential for both parties to ensure compliance and make informed decisions.

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Author Bio

CA Vikram Tongya, a seasoned Chartered Accountant since 2009, is a distinguished professional in the field of finance and taxation. Currently serving as a partner at STAK & Associates, a reputable firm known for its expertise in financial services, Vikram brings a wealth of experience and insigh View Full Profile

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