Joint Development Agreement

[Prasenjit Pal]

Sir, the query as posted yesterday needs to be revised and the corrected one is below

Joint Development Agreement(JDA) was executed between landowner and builder for construction of a residential building ( commercial area exceeds 15% of total capet area) on 31.08.2018. Since then neither construction was started nor commencement certificate was obtained till date. Even plan was also not sanctioned till date.

But an amount of ₹ 25 lacs has been paid to the owner by the builder on 31.08.2018 as a part of consideration (in addition to to the proposed share of flats). Even the flats have not been earmarked for this purpose as all the plans are not yet approved for commencement of project

Wheather any GST needs to be paid by virtue of that JDA executed 31.08.2018 and transfer of ₹ 25 Lacs from builder to developer and and if applicable wheather as per new scheme as applicable from 01.04.2019 or as per old scheme ?

[Shilpi Jain]

Since the JDA was entered before 1.4.19, the taxability would be as per the old scheme. No RCM will apply to developer on development rights transferred. Liability will arise at the time of allocation i.e. supplementary agreement.

For the services provided on the Landowner's share there is a possibility to pay as per the rate in the new scheme.

AI Summary

GST taxability of joint development agreements: pre scheme JDAs follow old regime and liability arises on allotment. A JDA executed before 01.04.2019 is governed by the old GST scheme; transfer of development rights under that pre scheme JDA does not attract reverse charge on the developer. GST liability on the developer's consideration arises at the time of allocation/allotment (supplementary agreement). Services relating to the landowner's share may be taxable under the new scheme rates when those services are provided or allotted.