1. Joint Development Agreement (JDA)is one of the oldest forms of arrangement between a developer and a land owner. Under this model the land owner offer rights in land and developers undertakes constructions activity on the land owned by the land owner. They both share certain portion of the area under construction in an agreed manner. Both the parties have liberty to sales the under constructions area from their own share to their prospective buyers as well.
2. But this model of arrangement is attracting attention of the tax authorities since long and there is always a dispute on the taxability under this model. In this write up the author tried to highlight some of the key issues in recent past under JDA in GST laws.The view expressed here-in-below would be personal views of author only.
3. As per schedule II part 1 (c) of the CGST Actany transfer of title in goods under an agreement which stipulates that property in goods will pass at a future date upon payment of full consideration as agreed, is a “supply of goods”.
4. As per schedule II part 5 of the CGST Actthe following shall be treated as “supply of service”:
Renting of immovable property.
Construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or before its first occupation, whichever is earlier.
5. As per Notification No. 13/2017-CT(R) on dated 28th June, 2017; services supplied by any person by way of TDR or FSI for construction of a project by promoter the tax shall be payable by the promoter by RCM. The liability to pay GST on development rights shall arise on the date of completion or first occupation of the project, whichever is earlier.
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