TaxTMI 
TaxTMI 
Land sale by builder(Developer) on behalf of land owner (Farmer) as per Joint development agreement (JDA). Sharing of revenue at specified ratio per JDA. Land development charges paid by builder (Developer) without any ownership transfer of Land. Whether any GST is leviable on the share of builder towards sale of plot on behalf of farmer. The farmer & Builder are registered persons under GST & Developed Plots have been sold after grant of completion certificates. Two Advance ruling authorities have levied GST on the share of builder towards sale of plots treating sale proceeds as consideration for rendering services to farmer by the builder.
Rrendering services to farmer by the builder towrds sale of developed Plots
04 May 2020 
7 Replies 
1768 Views Asked by
Consideration for development services may attract GST, requiring developer invoicing and raising RCM and time-of-supply issues.
Whether the developer's retained share of sale proceeds under a Joint Development Agreement is consideration for development service subject to GST is the core issue. One advisory view treats tax as payable under the Reverse Charge Mechanism; another treats the retention as taxable consideration requiring the developer to issue invoices and account for tax, with time of supply on sale of each plot. The applicability of Schedule III entry 5 (sale of land not treated as supply) is raised but not resolved. (AI Summary)
Whether the developer's retained share of sale proceeds under a Joint Development Agreement is consideration for development service subject to GST is the core issue. One advisory view treats tax as payable under the Reverse Charge Mechanism; another treats the retention as taxable consideration requiring the developer to issue invoices and account for tax, with time of supply on sale of each plot. The applicability of Schedule III entry 5 (sale of land not treated as supply) is raised but not resolved. (AI Summary)