GST on TDR (Transferrable Development Rights)

[Kalpesh Shah]

My client purchase a TDR (Transferrable Development Rights) on 05/02/2019 for constructing a RREP. So, he will be liable to pay GST on RCM basis on TDR purchase from Unregistered Seller on unsold area of the project. The Tax officer has issued show cause notice regarding the payment of GST on TDR being the project was started for which TDR purchased from 01/07/2019 and completed on 25/06/2021 as per OC despite TDR was purchased before 01/04/2019.

Please give your valuable opinion on above matter supporting with any case law or judgement.

Thanks & Regards

[Sadanand Bulbule]

 The TDR in question was purchased on 05-02-2019, i.e., prior to 01-04-2019.

The point of supply of TDR was completed before 01/04/2019. So the later date of Occupancy Certificate is immaterial for applicability of 01/04/2019 notification.

In terms of Notification No. 04/2019-Central Tax (Rate) dated 29-03-2019, the RCM liability on TDR/FSI arises only for transfers made on or after 01-04-2019.

[Sadanand Bulbule]

Also Refer Patna High Court judgement dated 05/05/2025 rendered in Shashi Ranjan Constructions Pvt Ltd Vs. Union of India reported in 2025(5) TMI 633.

This judgement clarifies "time of supply of constructions services" by the developer to the landowner in lieu of TDR, irrespective of JDA date [including pre-GST period].

[Shilpi Jain]

Since TDR was purchased before 1.4.2019 - the liability for TDR should be on the person who sold the TDR and not the developer

[Jeyo Tak]

Since the TDR was bought before 01/04/2019, GST generally shouldn’t apply, but if the project started after 01/07/2019, RCM might still be triggered.

AI Summary

Majority holds GST reverse charge on TDR transfers doesn't apply when point of supply predates 01/04/2019; seller liable Client purchased TDR on 05/02/2019, before 01/04/2019; dispute concerns whether GST under reverse charge applies to the developer despite an occupancy certificate dated 25/06/2021 and project start after 01/07/2019. Majority view: point of supply and purchase predate 01/04/2019, so the 01/04/2019 notification triggering RCM on TDR transfers does not apply and the seller, not the developer, bears any tax liability. A recent high court decision is cited as supporting that time of supply for TDR-based construction services governs GST liability irrespective of JDA or later OC dates.