GST ON LAND DEVELOPMENT RIGHTS

[KUNAL DESAI]

There are following 2 queries from my end.

1. Whether GST RCM would be applicable on FSI paid to Local Authority as per Entry -4 of 12/2017-CT(R)?

Whether will it make any difference if "Local Authority" was removed from the entry vide Notification No. 14/2018-CT(R) dated 26.07.2018 so as to change position from 26/07/2018 to 31/03/2019?

2. What would be the position of taxability in the case of Land Development Rights given to Developer for Developed Plots wherein Landowner and Developer firm are related party transactions meaning thereby Landowner are partner in the partnership firm of the developer firm?

What would be the valuation for such Rights ignoring the principle that the GST is not to be paid on Land or Plots thereof?

AI Summary

Valuation of development rights: treated as supply only if service, valued by reference to similar apartments charged to independent buyers.
Payments for FSI to local authorities are treated as exempt under the relevant notification and local authority functions; removal of "local authority" from a later notification raises transitional uncertainty. Land development rights are described as benefits arising from land and therefore immovable property under Schedule III (neither goods nor services), but prior rulings have treated them as services; if so, valuation is fixed by reference to similar apartments' prices charged to independent buyers nearest the transfer date. Related party transfers and input tax credit on capitalised development services are noted as open practitioner questions.