Rate of GST on Landlord liability on JDA

[Ravikumar Doddi]

Dear sir,

Registered person has entered JDA with the builder in the year 2018 and in that Landlord portions was already marked, now the project was commenced 2019 site formation etc, what is the liability(rate of tax) of the landlord on their portion of the flats earmarked in JDA and landlord is liability to pay(rate of tax) on construction service rendered by builder. Now Landlord getting advances from prospective buyers.

[Rajagopalan Ranganathan]

Sir,

As per Notification No. 4/2018-Central Tax (Rate) dated 25-01-2018 (a) registered persons who supply development rights to a developer, builder, construction company or any other registered person against consideration, wholly or partly, in the form of construction service of complex, building or civil structure; and

(b) registered persons who supply construction service of complex, building or civil structure to supplier of development rights against consideration, wholly or partly, in the form of transfer of development rights,

as the registered persons in whose case the liability to pay central tax on supply of the said services, on the consideration received in the form of construction service referred to in clause (a) above and in the form of development rights referred to in clause (b) above, shall arise at the time when the said developer, builder, construction company or any other registered person, as the case may be, transfers possession or the right in the constructed complex, building or civil structure, to the person supplying the development rights by entering into a conveyance deed or similar instrument (for example allotment letter).

The provision is same under Notification No. 04/2018-Integrated Tax (Rate) dated 25.01.2018.

According to Notification No.11/2017-Central Tax (Rate) dated 28.06.2017 (Sl. No. 3) the rate of gst is 9% CGST and 9% SGST.

[Himansu Sekhar]

Sir, what will happen in the following situation

A govt. Authority a regs. Person transfers development rights to a developer on receipt of consideration during s.tax period. The developer paid him in cash. The buildings completed in gst period. Whether the developer will pay any gst for the considerations received during s.tax period.

[Ravikumar Doddi]

Dear sir,

What is the liability of GST as the Landlord is getting advances during the current year period 2019-20 of his portion of flats in the JDA as the construction will complete over a period 3-4 years

[KASTURI SETHI]

Pl. go through this decision of AAR. It throws light on your issue

2019 (20) G.S.T.L. 184 (A.A.R. - GST) = 2018 (12) TMI 534 - AUTHORITY FOR ADVANCE RULINGS, KARNATAKA IN RE : NFORCE INFRASTRUCTURE INDIA PVT. LTD.

 

[KASTURI SETHI]

Advance amount cannot be treated as consideration. Advance is subject to finalization. Advance is subject to 'time of supply'. Advance amount taken from receiver of service takes the form of 'consideration' at the time of supply of service.GST is applicable.

AI Summary

GST on development rights: liability arises on transfer of possession and advances taxed at the time of supply. Supply of development rights or construction services under a joint development agreement is taxable as a service, with tax liability arising when the developer transfers possession or rights in the constructed property by a conveyance deed, allotment letter or similar instrument. Advance payments from buyers do not become taxable consideration on receipt; they are treated as consideration and attract GST only at the time of supply as determined by the time-of-supply provisions.