Professional Documents
Culture Documents
GST Lon Landowner Share
GST Lon Landowner Share
Request a demo
CONTENTS [ Show ]
GST on Joint Development Agreement (JDA) is charged at 18% on the value of the contract. A JDA is a contract between a real estate developer and the landowner to build projects on the
latter’s land. As per the contract, the landowner provides the land, and the developer manages the construction side of the project.
Continue reading to find out the scope of GST on the joint development agreements, the SAC codes, and the availability of ITC.
When the construction of a property is over, the developer transfers the possession of the building to the landowner by signing an allotment letter or entering into a conveyance deed. The
landowner has to pay 18% Goods and Services Tax (GST) on a joint development agreement.
Three types of transactions can occur in every JDA, and accordingly, the GST is applied to those transactions:
When the landowner transfers development rights to the developer — wholly or partly in the form of construction service
When the developer transfers construction services to the landowner – wholly or partly in the form of a transfer of development rights
Let’s discuss the scope of GST on joint development agreements for these three cases:
Before March 2019: If the parties entered the JDA before March 31, 2019, the landowner needs to pay 18% GST. The value on which GST is charged is determined by Rule 27 of CGST Rules and
Section 15 of the CGST Act of 2017. The concerned party has to pay the tax on the constructed building’s date of transfer of possession.
For example: If the landowner has property worth Rs.1,00,000, they would have to pay Rs.18,000 (18% of 1,00,000) on the property’s date of transfer of possession.
After March 2019: However, if the parties entered the JDA on or after April 1, 2019, the GST should be discharged by the developer under the reverse charge mechanism. In this case, a GST of 1%
The developer has to pay GST on a reverse charge basis at the applicable rate. The value on which the GST is charged is based on the value of development rights of residential apartments —
only for the apartments that remain unbooked on the date when the completion certificate was issued or the first apartment was occupied, whichever is earlier.
Value = GST payable on developmental rights * carpet area of apartments unbooked as of the date of the completion certificate / total area of the apartment.
Moreover, the payable tax should not exceed 0.5% or 2.5% of the value of remaining unbooked apartments. This tax must be paid on the date of the first occupation of the apartment or the
For example, the residential property comes in the affordable range at Rs.20,000. Then the landowner will pay 1% GST or Rs.200 – either when the completion certificate was issued or when
Before or after March 2019: For the transfer of development rights by the landowner, the landowner needs to pay 18% GST. The value on which GST is paid is decided per CGST Rule 27 and
Request a demo
For example, say the value of a commercial building is Rs.10,00,000, then the landowner will have to pay 18% GST or Rs.1,80,000. The GST remains the same whether the deal was signed before
Before March 2019: The developer pays 12% GST on this transaction. The value on which the GST is paid is determined as per Section 15 of the CGST Act and CGST Rule 27. Also, the GST is 12% if
the developer pays under the old scheme. Otherwise, under the new scheme, they must pay 1.5% GST for affordable housing or 7.5 non-affordable.
For example, under the old scheme, the developer will pay 12% GST on a building worth Rs.1,00,000. This means the developer will have to pay Rs.12,000.
On or After March 2019: The developer pays 1.5% GST for affordable properties or 7.5% non-affordable on the value of service determined as per the amount charged from the independent
buyer. The liability to pay this tax arises on the first occupation of the project or the date of completion, whichever is earlier.
For example, assuming the property is non-affordable at Rs.50,00,000. The developer will have to pay 7.5% or Rs.3,75,000 in GST.
Before or After 2019: For construction services rendered by the developer to the landowner, the developer needs to pay 12% GST. Section 15 of the CGST Act, read with CGST Rule 27, determines
the supply's value. The payment has to be made on the date of transfer of possession by entering into a conveyance deed.
After March 2019: Again, the developer pays 12% GST. The value of the service is determined depending on the amount charged to independent buyers nearest to JDA. The liability to make
payment is liable on the date of first occupation or completion of the project, whichever is earlier.
For example, say the value of the commercial property is Rs.100,00,000. Before 2019, a developer would have to pay Rs.12,00,000 in GST on this property. And if they charged the same amount
to independent buyers, they would have to pay Rs.12,00,000 in GST after March 2019. GST would vary depending on the value of the service.
Before March 2019: The transaction value, in this case, is decided by Section 15 of the CGST 2017. The GST payment becomes due on the invoice or payment date, whichever occurs first. The
After March 2019: The transaction value, in this case, is decided by CGST Section 15. The GST is 1.5% for affordable properties. 7.5% for non-affordable properties. Or 12% on transaction value.
The payment becomes due on the invoice or payment date, whichever occurs first.
For example, the value of the property is Rs.10,000. In this case, before March 2019, the landowner would have paid Rs.1,200 in GST. However, after March 2019, seeing as the property is
The GST on Joint Development Agreement and SAC Code for various categories are as follows:
GST on the transfer of development rights (taxability in the hands of the developer) 18% 9972
GST on the construction service of apartments that the developer gave to the landowner for the transfer of development rights 9954
Affordable residential apartment: 1%
Non-affordable: 5%
GST on the transfer of development rights from the landowner to developer Nil 9954
Availability of ITC
Input Tax Credits (ITC) for various categories are shown in the following table:
Transaction in JDA Whether or not ITC is available
Transfer of development rights to developer by landowner (for residential & commercial) No ITC
In a joint development agreement, a landowner agrees with a real estate developer to construct a property on the former’s land at the latter’s cost.
In the revenue sharing joint development agreement, the landowner provides land to the developer, and the developer’s responsibility is the construction and other development activities.
Both parties enter into a sale agreement with the buyer in this case. Since the buyer receives the ultimate service, they are the one who pays GST. Currently, the GST rate is 1% or 5% after
Capital gain on JDA is levied in the year in which the landowner hands over the property to the developer for development. It is chargeable to income tax as ‘income’ of the preceding year –
meaning the year in which the certification of completion of the entire property or a part of the property is issued.
It can also be levied when the developer transfers the project on or before the certificate issuance date. In this case, the capital gains are also applied to the previous year's income. As
per Section 194-IC, the developer can deduct a TDS of 10% if they pay an amount to the landowner besides the share in the project.
Yes, GST is applicable on development agreements and varies from 1–18% depending on the type of project.
BROWSE BY TOPICS
House Property
Salary Income
Advance Tax
NRI
HUF
POPULAR ARTICLES
Sections 206AB and 206CCA of Income Tax: Analysis, Applicability and FAQs
Goods Transport Agency under GST
Works Contract under GST- How Will GST Impact Works Contract?
RELATED ARTICLES
Follow us on C O M PA N Y
About us
Contact us
PRODUCTS
ClearGST Enterprises
GST ClearGST
GST Login ClearE-Waybill
GST software e-Invoicing Software
New GST returns ClearTDS
e-invoicing eWay Bill Registration
Input tax credit
CAs SMEs
TO O LS
ICICI Prudential Technology Fund Direct Plan Growth Tata Digital India Fund Direct Growth Axis Bluechip Fund Growth ICICI Prudential Technology Fund Growth
Aditya Birla Sun Life Tax Relief 96 Growth Aditya Birla Sun Life Digital India Fund Direct Plan Growth Quant Tax Plan Growth Option Direct Plan SBI Technology Opportunities Fund Direct Growth
TO P A M CS
SBI Mutual Fund Nippon India mutual fund HDFC Mutual Fund UTI mutual fund Kotak Mahindra Mutual Fund ICICI Prudential Mutual Fund Aditya Birla Mutual Fund
STO CK M A R K E TS
Stock Market Live Yes Bank Share Price SBI Share Price IRCTC Share Price ITC Share Price TCS Share Price Tata Motors Share Price Infosys Share Price Idea Share Price
BEST FUNDS
Best Mutual Funds Best Tax Savings Mutual Funds Best Index Funds Best Equity Mutual Funds
Clear offers taxation & financial solutions to individuals, businesses, organizations & chartered accountants in India. Clear serves 1.5+ Million happy customers, 20000+ CAs & tax experts & 10000+ businesses across India.
Efiling Income Tax Returns(ITR) is made easy with Clear platform. Just upload your form 16, claim your deductions and get your acknowledgment number online. You can efile income tax return on your income from salary, house property, capital gains,
business & profession and income from other sources. Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing.
CAs, experts and businesses can get GST ready with Clear GST software & certification course. Our GST Software helps CAs, tax experts & business to manage returns & invoices in an easy manner. Our Goods & Services Tax course includes tutorial videos,
guides and expert assistance to help you in mastering Goods and Services Tax. Clear can also help you in getting your business registered for Goods & Services Tax Law.
Save taxes with Clear by investing in tax saving mutual funds (ELSS) online. Our experts suggest the best funds and you can get high returns by investing directly or through SIP. Download Black by ClearTax App to file returns from your mobile phone.
ISO 27001
Data Center