Aeka – Taxmann Webinar

Decoding GST implications

on Joint Development
Agreements

June 13, 2024

Disclaimer: The content of the note is entirely for information and training
purposes only and should not be construed as an opinion
 What is a Joint Development Agreement?

Area Share
General JDA Construct
• Landowner is the sole and absolute owner of a land parcel
Landowner Developer
• A renowned developer known for various real estate projects
approaches the landowner with the intention of constructing a
building in the land parcel

• Landowner agrees to provide the developer with the right to

construct a building on his land parcel in return of a share in the
eventually constructed units/ a share in the revenue from sale of
40% 60% constructed units

• This is commonly referred to as a joint development agreement

Revenue Share
• From a GST perspective, we will look at the following various types of
JDAs:
Landowner Developer
− Residential project meant for sale

− Commercial project meant for sale

− Commercial project meant for leasing

The above projects may either be area sharing or revenue sharing

projects
100% 2
 Important JDA documents

Joint Development Agreement (JDA) General Power of Attorney (GPA)

• This agreement lays down the base construct of the • This document is entered into between the landowner and
project the developer to enable the developer to do certain acts on
behalf of the landowner. The GPA provides the developer the
• Contains details such as the responsibilities of the right to obtain plan sanctions, obtain required registrations,
landowner, responsibilities of the developer, the apply for licenses etc
sharing ratio etc

Commencement Certificate
Allocation Agreement
• This certificate is issued by the local authorities to signify
• This agreement is entered into post the signing of
that the project has met all the legal pre-requisites. This
JDA and GPA. It clearly demarcates the units of the
certificate allows the developer to begin work on this project
constructed project that will be provided to the
landowner and the units that will belong to the
developer

Completion Certificate

• A completion certificate certifies that the building is constructed by

following the approved building layout and the standards set by the
local authority, like building height and the distance from the road,
among many other things. This certificate is compulsory to apply
for basic amenities like electricity and water supply
3
Key milestones to determine value

1 2 3 4 5 6

Executing Sale nearest

JDA with other Subsequent Sale closest to Completion Possession of
to the JDA sale of units date of OC/CC Certificate
documents date unit

• Important for valuation – ‘nearest to the date on • Important for capping of valuation of TDR –
which such development rights or FSI is transferred ‘remaining un-booked on the date of issuance of
to the promoter’ completion certificate or first occupation’
• Valuation of TDR and construction services on the • Valuation of unsold units in TDR computation on
basis of value on this date the basis of the value on this date

• Referred to as ‘first sale value’ or ‘launch price’ • Referred to as ‘Last sale value’ or OC/CC value

4
Supplies involved in a typical JDA project
1
Transfer of Development
Rights

Landowner Developer

4 2
3
Provision of Construction
Sale of units to end services Sale of units to end
customers customers

Sl No. Transaction Supplier of service Recipient of service

1 Transfer of development rights Landowner Promoter

2 Provision of construction service Promoter Landowner

3 Sale of units to end customer Promoter Third-party

Landowner (only area

4 Sale of units to end customer Third-party
share)

5
Journey - Taxation of Real estate transactions (incl JDA)

Pre
2012
Positive List
Service Tax Taxability differs –
based on governing
principles under
each time frame
2012 to
2017
July
Negative List – 2017
Service Tax

GST Law
implemented
April
2019

Multiple
Notifications
6
Taxability of Development Rights

Service tax Regime Goods and services tax Regime

(till 30 June 2017) (from 1 July 2017)
• Transfer in title of goods or immovable property, by way of sale, • Schedule III excludes the sale of land and sale of completed
gift or in any other manner does not fall under the definition of building and not the sale of immovable property from the
service and hence, not liable to service tax purview of GST

• The General Clauses Act, 1897, defines immovable property to • Various notifications by the Revenue Authorities makes their
include land, benefits to arise out of land, and things attached intention clear to tax the transfer of development rights
to the earth, or permanently fastened to anything attached to
the earth • Recent judgement passed by the Telangana High Court in case
of Prahitha Contruction (P.) Ltd. Versus Union of India ([2024]
• Possible to argue that the development rights should qualify as 159 [Link] 437 (Telangana)), upholding the constitutional
immovable property and hence not leviable to service tax validity of taxability of TDR

• Judicial precedents: • Matter currently pending before Hon’ble Supreme Court

 Chheda Housing Development Corporation vs. Bibijan • Therefore, as the law stands today, it is difficult to contend that
Shaikh [2007] 2 Bom CR 587 the transfer of development rights would not be subject to GST
 DLF Ltd vs. Commissioner of Service Tax [Appeal No.
ST/60493/2018 Date of Decision: 22.05.2019] • Advance Rulings:
 DLF Commercial Projects Corporations vs. Commissioner
of Service Tax [2019] 105 [Link] 344 (Chandigarh -  Vilas Chandanmal Gandhi, In re – [2020] 120
CESTAT) [Link] 83 (AAAR - Maharashtra)
 Sadoday Builders Private Ltd vs. The Jt. Charity  Maarq Spaces (P.) Ltd., In re – [2020] 116 [Link]
Commissioner [Writ Petition NBO.4543 OF 2010] 702 (AAAR – Karnataka)

7
 New terms introduced in 2019 notifications

 Section 2(zk) of RERA 2016: promoter means

Promoter i. a person who constructs or causes to be constructed an independent building or a building consisting of apartments, or
converts an existing building or a part thereof into apartments, for the purpose of selling all or some of the apartments
to other persons and includes his assignees ………

Project  the term "project" shall mean a Real Estate Project or a Residential Real Estate Project

 Section 2(zn) of RERA 2016: real estate project means the development of a building or a building consisting of
apartments, or converting an existing building or a part thereof into apartments, or the development of land into plots or
Real Estate Project apartments, as the case may be, for the purpose of selling all or some of the said apartments or plots or building, as the
case may be, and includes the common areas, the development works, all improvements and structures thereon, and all
easement, rights and appurtenances belonging thereto

Residential Real  Clause (xix) of Notification No. 3/2019 Central tax (Rate): Residential Real Estate Project (RREP) shall mean a REP in
which the carpet area of the commercial apartments is not more than 15 per cent of the total carpet area of all the
Estate Project
apartments in the REP
8
Types of JDAs

Taxability
Types of JDAs
differs –
depending
upon the type

Project intended Project not

for sale intended for sale

Residential Commercial Commercial

Area Revenue Area Revenue Area Revenue

Sharing Sharing Sharing Sharing Sharing
Sharing

9
Residential Project - intended for
sale
T-1: Transfer of development rights – Residential (area share)
1
Transfer of Development
Rights
Landowner Developer

GST Implications

Sl No. Particulars Details Reference

1 Supplier of service Landowner

Notification No. 5/2019 Central

2 Person liable to pay tax Developer – Promoter
Tax (Rate)
In a tax period not later than the tax period in which the date Notification No. 6/2019 Central
3 Time of supply
of issuance of OC/CC Tax (Rate)
Deemed to be equal to the value of similar apartments
charged by the promoter from the independent buyers nearest
to the date on which such development rights or FSI is
transferred to the promoter Notification No. 4/2019 Central
4 Value of supply
Exemption: GST on TDR exempted proportionate to the carpet Tax (Rate)
area of units sold before OC/CC
Upper cap: GST liability @1%/5% of value of unsold units as
on the date of OC/CC
Notification No. 11/2017 Central
5 Rate of tax 18% under HSN code 9972
Tax (Rate)
Notification No. 3/2019 Central
6 Input tax credit ITC not available in the hands of the developer - promoter 11
Tax (Rate)
T-2: Provision of construction services – Residential (area share)

Landowner Developer

2
Provision of Construction
services
GST Implications

Sl No. Particulars Details Reference

1 Supplier of service Developer – Promoter

2 Person liable to pay tax Developer – Promoter Section 9 of CGST Act

In a tax period not later than the tax period in which the date Notification No. 6/2019 Central
3 Time of supply
of issuance of OC/CC Tax (Rate)
Deemed to be equal to the total amount charged for similar
apartments in the project from the independent buyers,
Notification No. 11/2017 read
nearest to the date on which such development right or FSI
4 Value of supply with Notification No. 3/2019
(including additional FSI) is transferred to the promoter, less
Central Tax (Rate)
the value of transfer of land, if any, as prescribed in paragraph
2
Notification No. 11/2017 read
5 Rate of tax 1.5%/7.5% as the case may under HSN code 9954 with Notification No. 3/2019
Central Tax (Rate)
ITC on construction cost not available in the hands of the
Notification No. 3/2019 Central
6 Input tax credit developer. However, Landowner can take ITC of GST charged
Tax (Rate)
by Developer
12
T-3: Sale of units to end customer – Residential (area share)
3 3

Sale of units to end Sale of units to end

customers customers
Developer Landowner

GST Implications

Sl No. Particulars Details Reference

1 Supplier of service Developer – Promoter/ Landowner as the case may be

2 Person liable to pay tax Developer – Promoter/ Landowner as the case may be Section 9 of the CGST Act

Date of receipt of advance or as per the milestones agreed in the

3 Time of supply Section 13 of the CGST Act
agreement to sell
Transaction value charged to the customer, less the value of land
4 Value of supply Section 15 of CGST Act
(1/3rd of total value)
1.5%/7.5% as the case may under HSN code 9954 Notification No. 11/2017
5 Rate of tax read with Notification No.
No GST on units sold after OC/CC 3/2019 Central Tax (Rate)
ITC on construction cost not available in the hands of the developer
Notification No. 3/2019
6 Input tax credit Landowner can utilize the ITC of the GST charged by the Developer
Central Tax (Rate)
on the construction services rendered to offset against the liability
arising from the sale of units to end customers

13
GST implications on Residential (area share v/s revenue share)

Transaction Particulars Implication under Area share Implication under revenue share

T-1: Transfer of Person liable to pay tax Tax payable by developer under RCM Tax payable by developer under RCM
development rights
Time of supply Tax may be remitted upto the date of OC/CC Tax may be remitted upto the date of OC/CC

Value of supply Deemed to be equal to the value of similar Actual Revenue Share of sold units upto date
apartments charged by the promoter from the of OC/CC + the estimated revenue share
independent buyers nearest to the date on receivable on unsold units
which such development rights or FSI is
transferred to the promoter
Exemption Exemption available proportionate to units Exemption available proportionate to units
sold prior to date of OC/CC sold prior to date of OC/CC
Limitation GST on TDR limited to 1%/5% of the value of GST on TDR limited to 1%/5% of the value of
unsold units as on the date of OC/CC unsold units as on the date of OC/CC
T-2: Provision of Person liable to pay tax Tax payable by developer No provision of construction services in a
construction revenue share JDA
services
Time of supply Tax may be remitted upto the date of OC/CC

Value of supply Value is deemed to be equal to the value of

similar apartments nearest to the date on
which such development rights or FSI is
transferred
14
Practical issues faced in residential
project intended for sale
 Issue 1 - 1/3rd Land abatement on TDR value?

Points to consider:
• FAQ 11 of F. No. 354/32/2019-TRU:
‘Supply of TDR or FSI, on such value which is
Whether 1/3rd land proportionate to construction of residential
abatement could be apartments that remain un-booked on the
applied to value/ date of issue of completion certificate or first
rate of TDR also? occupation, would attract GST at the rate of
18%’
• Deemed valuation methodology does not
explicitly provide for Land deduction

Extract of relevant provisions (Value of TDR): Extract of relevant provisions (Value of construction service):
• Para 1A of 12/2017 read with 4/2019 - Value of supply of service by way of • Para 2A of 11/2017 read with 3/2019 - the value of construction service in
transfer of development rights or FSI by a person to the promoter against respect of such apartments shall be deemed to be equal to the Total
consideration in the form of residential or commercial apartments shall be Amount charged for similar apartments in the project from the
deemed to be equal to the value of similar apartments charged by the independent buyers, nearest to the date on which such development right
promoter from the independent buyers nearest to the date on which such or FSI (including additional FSI) is transferred to the promoter, less the
development rights or FSI is transferred to the promoter value of transfer of land, if any, as prescribed in paragraph 2 above

16
 Issue 2 - Determination of unsold units when computing GST of TDR

Formula prescribed in 4/2019 Central Tax :

Project Units
carpet area of the residential apartments in
= 100
GST payable on TDR for the project which remain un-booked on the
construction of the date of OC/CC
residential apartments in
Developer
the project Total carpet area of the residential
Landowner
Share = 40 Share = 60 apartments in the project

Unsold - Unsold -
Sold - 30 Sold - 40
10 20
Points to consider:
• Considering the Landowner’s share of unsold units as unsold for the
purpose of the above formula, will lead to double taxation of the same
units

Unsold units for the • Given that on the 10 unsold units of the Landowner, GST has already
purpose of computing been paid by developer as construction service, can one argue that for
exemption on TDR to be the purpose of the formula, such units can be considered as already
taken as 20 or 30? sold?

17
Issue 3 - Non-refundable deposit (NRD) and its intricacies

Computation of GST on TDR: Whether non-

refundable deposit
GST on transfer of development rights is lower of the following: will be included at
(a) First proviso to Entry No. 41A of NN No. 4/2109 the time of
computing the value
as per (a) or (b) ?
GST payable on TDR
carpet area of residential apartments
in the project which remain un-
Value of Landowner’s
units closest to date of booked on the date of OC/CC
JDA X 18%
+ Total carpet area of the residential Points to consider:
Non-refundable deposit
apartments in the project
paid to Landowner • The term used in part (a) of the formula is ‘GST payable on TDR’
or
• Whether total value of TDR to be considered as total of monetary
(b) Second proviso to Entry No. 41A of NN No. 4/2109 consideration received in form of NRD plus non-monetary
Provided further that the tax payable in terms of the first proviso shall not consideration?
exceed 0.5% of the value in case of affordable residential apartments and
2.5% of the value in case of residential apartments other than affordable • Whether NRD needs to factored in the part (b) i.e., ‘value in case of
residential apartments remaining un-booked on the date of issuance of affordable residential apartments’ and how?
completion certificate or first occupation

18
 Issue 4 - Cancellation post OC – to be considered as unsold?

On date of OC/CC 3 months after OC/CC

Project Units Project Units

= 100 = 100

Landowner Developer Landowner Developer

Share = 40 Share = 60 Share = 40 Share = 60

Unsold - Unsold - Unsold - Unsold -

Sold - 30 Sold - 40 Sold - 30 Sold - 35
10 20 10 25

If the agreement for sale of certain units are cancelled after the date of receipt of OC and the final calculation of GST on TDR is done, what would
be the impact?

Points to consider:
• Notification No. 4/2019 Central Tax : ‘Provided that the promoter shall be liable to pay tax at the applicable rate, on reverse charge basis, on
such proportion of value of development rights, or FSI (including additional FSI), or both, as is attributable to the residential apartments, which
remain un-booked on the date of issuance of completion certificate, or first occupation of the project, as the case may be’
19
 Issue 5 - Valuation of unsold units in Revenue Share JDA

Valuation of TDR
First unit sold for INR 1
crore
Points to consider:
Developer has
Second unit sold for INR Total revenue
.... Landowner’s Para 1A of NN 12/2017 read
sold 80 units received on sale
revenue share with NN 4/2019 - Value of
per-OC of units
supply of service by way of
Third unit sold for INR ....
transfer of development
rights or FSI by a person to
. the promoter against
= Approximately 12 crore
. consideration in the form of
. residential or commercial
. apartments shall be deemed
Unit sold closest to OC/CC to be equal to the value of
date for INR 2 crore similar apartments charged
OC/CC Received by the promoter from the
independent buyers nearest
to the date on which such
Unsold units to be valued
at INR 1 crore development rights or FSI is
Developer has transferred to the promoter
20 unsold OR
units
Unsold units to be valued
at INR 2 crore

Total Value of TDR = ?

20
Issue 6 - Resale of units by Landowner to Developer
2
Sale of under-construction units to
developer

1
1
Construction Construction
Developer Landowner Developer Landowner
service service
2 3
Sale of units to end Sale of units to end
customers customers

Landowner can offset his output liability using the input tax Can the developer off set the output liability using the input
credit availed on the construction services levied by developer tax credit available on the under-construction units sold by the
landowner to the developer?

Points to consider:
• Notification No. 3/2019 Central Tax : ‘where a registered person (landowner- promoter) who transfers development right or FSI (including
additional FSI) to a promoter (developer- promoter) against consideration, wholly or partly, in the form of construction of apartments,—
(i) the developer- promoter shall pay tax on supply of construction of apartments to the landowner-promoter, and
(ii) such landowner – promoter shall be eligible for credit of taxes charged from him by the developer promoter towards the supply of
construction of apartments by developer- promoter to him, provided the landowner-promoter further supplies such apartments to his buyers
before issuance of completion certificate or first occupation, whichever is earlier, and pays tax on the same which is not less than the amount
of tax charged from him on construction of such apartments by the developer-promoter’ 21
Commercial JDA projects –intended
for sale
GST implications on area share (Residential v/s Commercial)

Transaction Particulars Implication under residential area share Implication under Commercial area share

T-1: Transfer of Person liable to pay tax Tax payable by developer under RCM Tax payable by developer under RCM
development rights
Time of supply Tax may be remitted upto the date of OC/CC Tax may be remitted upto the date of OC/CC

Value of supply Deemed to be equal to the value of similar Deemed to be equal to the value of similar
apartments charged by the promoter from the apartments charged by the promoter from the
independent buyers nearest to the date on independent buyers nearest to the date on
which such development rights or FSI is which such development rights or FSI is
transferred to the promoter transferred to the promoter
Exemption & Limitation Exemption available for units sold prior to date No Exemption or limitation available for units
of OC/CC subject to 1%/5% of the value of sold prior to date of OC/CC
unsold units as on the date of OC/CC
Input tax credit Developer not eligible to avail input tax credit Developer eligible to avail input tax credit of
the GST paid under RCM
T-2: Provision of Person liable to pay tax Tax payable by developer Tax payable by developer
construction
services
Time of supply Tax may be remitted upto the date of OC/CC Tax may be remitted upto the date of OC/CC

Value of supply Value is deemed to be equal to the value of Value is deemed to be equal to the value of
similar apartments nearest to the date on similar apartments nearest to the date on
which such development rights or FSI is which such development rights or FSI is
transferred transferred
23
GST implications on revenue share (Residential v/s Commercial)

Implication under residential revenue Implication under commercial revenue

Transaction Particulars
share share
T-1: Transfer of Person liable to pay tax Tax payable by developer under RCM Tax payable by developer under RCM
development rights
Time of supply Tax may be remitted upto the date of OC/CC No deferment benefit available under
Notification 6/2019
Value of supply Value is equivalent to the share of revenue Value is equivalent to the share of revenue
received on units sold upto date of OC/CC plus received on units sold upto date of OC/CC plus
the estimated revenue share receivable on the estimated revenue share receivable on
units remaining unsold on the date of OC/CC units remaining unsold on the date of OC/CC
Exemption & Limitation Exemption available for units sold prior to date No Exemption or limitation available for units
of OC/CC subject to 1%/5% of the value of sold prior to date of OC/CC
unsold units as on the date of OC/CC
Input tax credit Developer not eligible to avail input tax credit Developer eligible to avail input tax credit of
the GST paid under RCM
T-2: Provision of No provision of construction services in a No provision of construction services in a
construction revenue share JDA revenue share JDA
services

24
Practical issues faced in commercial
JDA - intended for sale
Issue 7 - ITC reversal proportionate to the land value?

Points to consider:
• Section 17(2) read with 17(3) of the CGST Act
Given that in a commercial considers ‘sale of land’ as exempt supply for
JDA, the Developer is eligible the purpose of undertaking reversal of
to avail and utilize the input common credits
tax credit, can the • Can the sale of land be considered as a
department argue that the supply made by the Landowner and not the
abatement provided for land Developer?
is an exempt supply and
• The notification provides a deemed
therefore, the common input abatement of 1/3rd value from the total
tax credit needs to be amount charged and the gross rate of 18%
reversed in proportion to the shall be charged on said abated value. There
exempt turnover? is no concessional rate given with condition of
ITC reversal, as covered under Explanation 4
to Rate Notification

26
 Issue 8 - GST on TDR – Can part liability be paid before OC?

Facts of the case

Landowner
• JDA Date: March 15, 2021 (Commercial Project meant for sale)

1 • GST payable for transfer of development rights: 1.5 Crores

Transfer of Development
Rights • Completion/Occupancy Certificate received on June 13, 2024

Developer

GST payable on TDR = 1.5 Crores Questions

1. Developer has a shortage of ITC in the month of August

2023, he is planning to pay a part of the TDR liability in this
Paid in Aug’23 Paid in Dec’23 Paid in Jun’24 month and pay the rest of the TDR liability either when
- INR 0.75 crore - INR 0.50 crore - INR 0.25 crore further requirement arises or at the time of receipt of
OC/CC. Can the Developer do so?

2. What are the safeguards to be taken if such a position is

adopted?

27
GST on Commercial JDA projects –
not intended for sale
T-1: TDR – Commercial (Area Share) – not intended for sale
1
Transfer of Development
Rights
Landowner Developer

GST Implications

Sl No. Particulars Details Reference

1 Supplier of service Landowner

Whether RCM entry will apply?

2 Person liable to pay tax Section 9 of CGST Act
Landowner under forward charge?
Whether deferment benefit under notification 6/2019 can be
3 Time of supply Section 13 of the CGST Act
taken?
Section 15 of the CGST Act, read
4 Value of supply As per valuation rules with Rule 27 and Rule 30 of the
CGST Rules
Notification No. 11/2017 Central
5 Rate of tax 18% under HSN code 9972
Tax (Rate)
ITC not available (Matter pending before Hon’ble Supreme
Court).
6 Input tax credit
Whether proportionate ITC to the extent attributable to
outward supply to Landowner can be taken?
29
T-2: Construction services – Commercial (Area Share) – not intended for sale

Landowner Developer

2
Provision of Construction
services
GST Implications

Sl No. Particulars Details Reference

1 Supplier of service Developer – Promoter

2 Person liable to pay tax Developer – Promoter

Whether deferment benefit under notification 6/2019 can be

3 Time of supply Section 13 of the CGST Act
taken?
Section 15 of the CGST Act, read
4 Value of supply As per Valuation Rules with Rule 27 and Rule 30 of the
CGST Rules
Notification No. 11/2017 Central
5 Rate of tax 18% under HSN code 9954
Tax (Rate)
ITC not available (Matter pending before Hon’ble Supreme
Court).
6 Input tax credit
Whether proportionate ITC to the extent attributable to
outward supply to Landowner can be taken?

30
Practical issues faced in
commercial JDA not intended for
sale
Issue 9 - Time of supply of transfer of development rights

Can it be argued, that the Points to consider:

time of supply for • Notifications issued in March 2019 are
commercial projects not binding only on projects intended for sale for
intended for sale shall also the reasons mentioned earlier
be in accordance with the • Can it be argued that supply of development
notifications issued in March rights is a continuous supply?
2019?

32
Taxability of Additional FSI
Taxability of Additional FSI (Transferable Development Rights)
Transfer of Development Rights v/s Transferable Development Rights
• Transferable Development Rights means certificates issued in respect of category of land acquired for public purposes either by the
Central or State Government in consideration of surrender of land by the owner without monetary compensation, which are transferable
in part or whole
• Transfer of Development Rights means supply of development rights, by owner of the land to a Developer / Builder, for constructing a
complex, building or civil structure

Is additional FSI taxable?

• Transferable Development Right (“TDR”) Certificate is also referred to as Additional FSI
• The treatment of additional FSI is on par with the treatment of transfer of development rights discussed earlier
• Recent judgement passed by the Telangana High Court in case of Prahitha Constructions Private Limited Versus Union Of India (Writ
Petition No.5493 of 2020), upholded the constitutional validity of taxability of ToDR
• FAQs on Real estate released by the Tax Research Unit of Government of India vide F. No. 354/32/2019-TRU dated May 7, 2019:

Sl No. Question Answer

28. Whether the GST is leviable on the output supply of Yes, GST is payable on transfer of development rights by a
Transferrable Development rights by a developer (usually developer to another developer or promoter or to any other
evidenced by TDR Certificate issued by the authorities). If yes, person under reverse charge mechanism @ 18% with ITC
under which entry and at what rate? under Sl. No. 16, item (iii) of Notification No. 11/2017 - Central
Tax (Rate) dated 28-06-2017 (heading 9972).

34
Issue 10 - Taxability of Additional FSI/ TDR

Additional FSI
Additional FSI Additional FSI

Promoter Owner Builder

Government Owner Owner (Unidentified/own
(project intended
for sale) use)

• Given that the additional FSI is going to

• Whether it is a service by Government? • Person liable to pay – Developer under be used for own property or project that
RCM ? has not yet been determined, whether the
• Person liable to pay – FCM or RCM? builder qualify to be a ‘promoter’?
• Time of supply - On or before the date of
• Exemption – Depends upon the end use OC/CC ? • Person liable to pay – Whether it falls
under the RCM entry?
• Alternatively, whether the supply of • Exemption – Should be available for the
additional FSI by government falls under booked units in the project (residential) • Time of supply - As per Section 13
the functions entrusted to the local
authority under Article 243W read with the • Exemption – Whether available?
twelfth schedule of the Indian Constitution
and hence exempt ?

35
Specific Issues in JDA
 Issue 11 - Valuation of TDR

Landowner’s Share Facts of the case

• JDA Date: June 15, 2021 (Residential Project meant for sale)

• Sharing Ratio: 60% to the developer and 40% to the landowner

Landowner • Landowner to get 15 units that are 2 BHK, 20 units that are 3 BHK
and 5 units that are 4 BHK

• Completion/Occupancy Certificate received on June 13, 2024

• Developer has sold one 3 BHK unit to a friend of his on June 17,
3 BHK 4 BHK 2021, at the rate of INR 1000/sq ft
2 BHK
• The subsequent sale of a 3 BHK unit made on July 20, 2021, was at
the rate of INR 3500/sq ft

• The first sale of a 2 BHK unit was made on July 1, 2021 at the rate of
15 units 20 units 5 units
INR 3000/sq ft and the first sale of a 4 BHK unit was made on
August 15, 2021 at the rate of INR 4500/sq ft

Question
The Developer has valued the TDR on the basis of the first sale value nearest to the date of the JDA i.e., INR 1000/sq ft. Will this
valuation hold good?
37
 Issue 12: Transitional project

JDA Signing Date – Facts of the case

December 12, 2018
• JDA Date: December 12, 2018 (Residential Project meant for sale)

• Sharing Ratio: 60% to the developer and 40% to the landowner

Project
Commencement • Project Commencement on March 01, 2019 and first booking received
Date – March 1, 2019 on March 21, 2019

• Completion/Occupancy Certificate received on June 01, 2023

Date of first booking

– March 21, 2019
Questions
April 1, 2019
1. Will GST be payable on the transfer of development rights?

2. GST payable on the transfer of development rights by the

Company does not landowner under forward charge or the developer under
opt for old scheme
reverse charge mechanism?

3. Since the project has commenced post April 1, 2019, benefit

of new notifications are being taken for construction
Project Completion services. Can this benefit be extended to the transfer of
Date – June 1, 2023 development rights also?
38
Issue 13 - Refund permissibility when GST is paid on estimated revenue

GST payable on estimated

revenue in Commercial
Revenue Share JDA? Points to consider:
• Section 54 of the CGST Act, allows for a
What happens to GST paid
refund of excess payment of tax
vs GST actual payable
computed with actual • However, the time period of 2 years to apply
for refund from the relevant date is to be
revenue?
considered

Excess paid refundable?

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Other Open Areas - Indicative List

If we consider that JDA (entered prior to April 1, 2019) was a commercial area share project intended for sale and on March 31, 2020,
1 the JDA was converted into a residential area share, would it be construed as signing a new JDA and the GST implications laid down
in the notifications issued on March 29, 2019 would apply?

Can it be argued that the intent of the law was to include even commercial JDA’s with the intention of leasing also under the purview
2 of the GST notifications issued on March 29, 2019?

In a commercial JDA not intended for sale, can the valuation of TDR be done on the basis of guideline value of built-up structure in
3 that area instead of adoption the cost plus 10% methodology?

4 What happens when one developer exit and new developer enters the project?

5 JDA for plotted development – GST implications?

6 Is there a different structure that can be considered to achieve the same commercial objective and can be cost efficient?
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