A developer has entered into a joint development agreement with the land owner. As per the agreement the developer has the right to sell the developed land into plots to the final customer. The developer receives the total sale consideration and out of that he gives the agreed proportionate land cost on sales consideration as land cost to the land owner.
What will be the rate of GST?
- The developer charged 18% i.e. 18% on the total receipt less 1/3 of land cost; thus effective rate will be 12%; or
- Flat 18% on the total receipts including land cost.
Clarification sought on GST rate: 18% on total receipts or effective 12% after deducting land cost in development deals. A developer entered a joint development agreement with a landowner, allowing the developer to sell developed plots and share sales proceeds with the landowner. The query was about the applicable GST rate: whether it should be 18% on total receipts minus one-third land cost, resulting in an effective 12% rate, or a flat 18% on total receipts. One respondent argued it was a revenue-sharing arrangement, not a joint development agreement, suggesting it might not be subject to GST. The discussion sought clarity on the correct GST application in such arrangements. (AI Summary)
TaxTMI 
TaxTMI 
