GST on TDR proportionate to commercial apartments in RREP

[Narayan Pujar]

Hi,

While GST exemption on Transfer of Development Rights (TDR) apply to sold residential apartments, they do not extend to commercial apartments. However, in the context of a Residential Real Estate Project (RREP), commercial units are treated similarly to residential units. Why, then, is there a differential treatment in GST between residential and commercial units with regard to TDR exemptions?

[Shilpi Jain]

Agreed. It looks like this has been missed. This is adding on to the cost since one would not get credit for the GST paid on TDR for these commercial units in RREP.

Additionally, I think the Government should make TDR for commercial units (whether REP or RREP) same as for residential units i.e. 5% only on unsold and not give credit since there is a lot of hassel in having to pay 18% GST on TDR and that too only by using electronic cash ledger and then take credit.

So a representation through associations is the need of the hour for these kind of issues which can bring some attention to these issues and some sensible solutions.

[Narayan Pujar]

Thank you for your response, Ma'am. One not so related question.

In a JDA, a landowner transfers the development rights to developer in exchange of newly constructed apartments. However, the other day I saw an agreement wherein the landowner has sold the land itself in exchange of apartments/shops. Why are not such agreements popular as the JDAs? Does it have any parallel implications in other laws? 

AI Summary

GST on TDR causes higher cost for commercial units in residential projects, prompting calls for aligned tax treatment. The document highlights a GST disparity: TDR for sold residential apartments receives concessional treatment while TDR attributable to commercial units in RREP is taxed differently, preventing input tax credit for developers and increasing costs. Respondents suggest aligning treatment so TDR for commercial units in REP/RREP receives the same concessional approach as residential units, and urge industry representation to seek remedial administrative or policy change.