Rate of tax on Transfer development rights

[Bharat Cholleti]

Dear sir,

1)What is the rate of tax on TDR and SAC, since the GST on TDR charged by the Developer does Landlord will get ITC.

2) who will pay the GST on unsold flats of lanlord and developer at the time of completion/occupancy certificate.

3) what is the tax implication on sale of landlord share of flats during construction period.

Please advice.

[KASTURI SETHI]

Dear querist,

Pl. go through the following decision of AAAR, Maharashtra. If still you have doubt, post your query again.

2020 (9) TMI 1145 - APPELLATE AUTHORITY FOR ADVANCE RULING, MAHARASHTRA IN RE : VILAS CHANDANMAL GANDHI

[Shilpi Jain]

1)What is the rate of tax on TDR and SAC, since the GST on TDR charged by the Developer does Landlord will get ITC.

GST on TDR is not an ITC for the landlord. It is the LOs outward liability which is paid by developer under RCM.

Rate of tax differs based on the valuation adopted.

2) who will pay the GST on unsold flats of lanlord and developer at the time of completion/occupancy certificate.

Unsold units related GST to be paid by the Developer

3) what is the tax implication on sale of landlord share of flats during construction period.

Applicable GST to be paid on customer sales

[Ethirajan Parthasarathy]

In the Joint Development Scheme, what the Developer gets is “Development Right” DR and not TDR.

DR is subject to RCM Tax which is elaborated in answer given by Ms. Shilpi Jain.

AI Summary

GST on development rights: reverse-charge liability lies with the landlord though developer may discharge it; no ITC to landlord.
GST on development rights is subject to reverse charge, constituting the landlord's outward liability though often paid by the developer, and is not available as input tax credit to the landlord. The rate depends on the valuation approach. Unsold units' GST at completion is to be paid by the developer. Sales of the landlord's share during construction attract applicable GST on customer supplies.