The Snake Keeper Blog

An agreement between a landowner and a real estate developer for the construction of new projects is called a joint development agreement. In a common development, the capital, the client carries out construction and justice work, while the landowner makes the land available. There are two common types of JDAs. They are as follows: the development of land in parcels and, subsequently, the sale of such land should not be taxable if the land does not in itself fall within GST Zone A (neither supply of goods nor services according to SCH-III), so how can there be a question of taxation of land? When the land is sold, they own all the properties of the land. The simple development from one land to another will not change the nature of the country. The same will always remain a motionless property and will only be called land in general. It would therefore be outside the scope of the GST. The only taxable turnover in such cases is the value of the works/contracts of enterprise. The sale of land should therefore not be taxable. A developer purchased the following goods and services [other than capital goods and services through the granting of development rights, long-term land leases or ISPs] for the construction of a residential real estate project during a fiscal year. For commercial housing (shops, offices, godowns, etc.) in RREP (Residential Real Estate Project), the GST CGST rate is 2.5% plus SGST/UTGST 2.5% (total of 5%) (excluding ITC). The actual GST rate for housing under construction, real estate or commercial real estate is 18%. However, 1/3 out of 18% is considered the value of the land or the total share of the land made available to the buyer of the property.

Thus, the rate will be 12% with the full ITC. However, the Hon`ble ITAT Hyderabad Bench `B` is in the case of Adhinarayana Reddy Kummeta v. Assistant Commissioner of Income Tax, Circle -11(1), Hyderabad 2018 (4) IMT 37 – ITAT HYDERABAD found that Section 45(5A) cannot be applied as a substantive provision to the previously concluded development agreement, which would certainly be drawn into Section 2(47)(v). Under the new regime, the GST rates for residential dwellings are as follows: in a similar judgment in Nforce Infrastructure Pvt. Ltd [20 G.S.T.L. 184], the Authority found that the taxable person provided construction services to the development rights provider in exchange for consideration in the form of a transfer of development rights. . .

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