Determination of TDR Value for tax liability under RCM payable by the Developer.

[KALLESHAMURTHY MURTHY K.N.]

Sir,

A land lord received a Transferable Development Right in lieu of land acquired by the Government Authority and sold it to a developer on a consideration. The developer has constructed apartments on that TDR purchased additionally to the existing constructions. OC is received on completion but remained some apartments un-sold. The tax payer has worked out the Tax payable under RCM on TDR working on the purchase value of TDR received by the landlord as under

GST= Purchase value x 18% / Total Carpet area

=tax amount per Sq.Ft. X carpet area unsold.

As per Notification No. 04/2019-Central Tax (Rate) New Delhi, the 29th March, 2019 in para

'1A. Value of supply of service by way of transfer of development rights or FSI by a person to the promoter against consideration in the form of residential or commercial apartments shall be deemed to be equal to the value of similar apartments charged by the promoter from the independent buyers nearest to the date on which such development rights or FSI is transferred to the promoter.

And

1B. Value of portion of residential or commercial apartments remaining un-booked on the date of issuance of completion certificate or first occupation, as the case may be, shall be deemed to be equal to the value of similar apartments charged by the promoter nearest to the date of issuance of completion certificate or first occupation, as the case may be.'

The question here is whether the value of TDR for tax calculation is the 'purchase value' of Transferable Development Right or the cost of the apartment sold to the individual buyer at the nearest date of OC received.

Whether there is distinguish between the value of taxable Transfer of Development Right (TDR) under JDA differs from the purchase value of Transferable Development Rights.

[Sadanand Bulbule]

Coming to the core question:

In a typical JDA, Transfer of Developement Rights [ToDR] involves barter--the deemed value.

Whereas for supply of Transferable Develoment Rights [TDR] in the open market, theconsideration is in money--the actual value under Section 2[31] of the Act

 

[Shilpi Jain]

Where actual consideration is available deemed valuation need not be adopted. Guj HC - Munjaal Manishbhai - 2022 (5) TMI 397 - GUJARAT HIGH COURT decision can be referred

[KALLESHAMURTHY MURTHY K.N.]

Thanks to Sri Sadanadabulbule Sir and Shilpi Jain for the valid replies.

AI Summary

TDR valuation: actual monetary consideration governs GST where sold; deemed apartment-value applies in barter/JDA contexts. Valuation for GST on supply of Transferable Development Rights depends on context: TDR transferred in a joint development arrangement is valued on a deemed basis equal to the value of similar apartments charged by the promoter nearest the relevant date, whereas TDR sold for money in the open market is valued at the actual consideration received and deemed valuation need not apply.