TaxTMI 
TaxTMI 
TaxTMI 
GST on TDR for JDA executed before commencement of GST
X X X X Extracts X X X X
X X X X Extracts X X X X
....ST on TDR for JDA executed before commencement of GST<br> Query (Issue) Started By: - NUKALA KUMAR Dated:- 1-5-2025 Last Reply Date:- 10-5-2025 Goods and Services Tax - GST<br>Got 9 Replies<br>GST<br>JDA is executed in 2015,project was commenced in 2018 and OC recieved in 2022. what is taxability of TDR (Transfer of developmental rights) by land owner to developer ? Liability to pay tax on TDR by land owner as per notification 04/2018 dated 25th January 2018?? Reply By Sadanand Bulbule: The Reply: GST in cash under RCM on TDR is to be paid by the developer/promtor of the project under JDA on the unbooked flats handed over to the landowner held in stock as on the date of obtaining Occupancy Certificate. The date of JDA is irre....
X X X X Extracts X X X X
X X X X Extracts X X X X
....levant, be it during pre-GST regime or otherwise. The matter is well settled. Reply By KASTURI SETHI: The Reply: 2021 (7) TMI 928 - AUTHORITY FOR ADVANCE RULING, TELANGANA - IN RE : VAJRA INFRACORP INDIA PVT. LTD. Reply By KASTURI SETHI: The Reply: 2024 (2) TMI 902 - TELANGANA HIGH COURT - PRAHITHA CONSTRUCTION PVT. LTD. Versus UNION OF INDIA Reply By KASTURI SETHI: The Reply: 2024 (5) TMI 1254 - SC ORDER - Prahitha Constructions Pvt. Ltd. Versus Union of India Reply By Shilpi Jain: The Reply: Since JDA before 2017 development rights have been transferred before introduction of GST. Service if any has been provided before introduction of gst. No levy under GST Le....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vy of service tax has to be seen, which will not applicable in line with decision of DLF as it is a transaction in immovable property. Reply By YAGAY andSUN: The Reply: This is a GST (Goods and Services Tax) question related to Transfer of Development Rights (TDR) under a Joint Development Agreement (JDA) between a landowner and developer, and you're referring to Notification No. 04/2018 - Central Tax (Rate) dated 25th January 2018. Let's break this down based on the dates and legal provisions: 📜 Key Legal Framework 🔹 Notification No. 04/2018 - Central Tax (Rate), dated 25.01.2018 This notification exempts the transfer of development rights (TDR), Floor Space Index (FSI), or long-term lease of land by a landowner t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o a developer for construction of residential apartments, subject to the following key condition: GST shall be payable by the promoter (developer) under reverse charge mechanism (RCM) at the time of issuance of completion certificate (OC) or first occupation, whichever is earlier. ✅ Your Scenario Event Date JDA executed 2015 (before GST era) Project commenced 2018 OC received 2022 🧾 Taxability of TDR in Your Case 1. Whether TDR is taxable? Yes, TDR given by landowner to developer is a taxable supply under GST. But not all TDR attracts GST, due to the conditional exemption under Notification 04/2018. 2. Who is liable to pay tax? * Developer is liable under Reverse Charge Mechanism (RCM). * Landowner is NOT req....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uired to pay GST directly on TDR as per Notification 04/2018. 3. When is GST payable on TDR? * At the time of issuance of OC or first occupation, whichever is earlier. * In your case, OC was received in 2022, so GST liability (if any) arose in 2022. 🏠 Special Case for Residential Apartments * If the units given to the landowner are for residential use, and the entire consideration for the TDR is used to construct residential apartments, then the TDR is exempt from GST, up to a certain limit. * No GST is payable on TDR to the extent it is used for the construction of residential units sold before OC. * However, if any units are sold after OC, GST is payable on proportionate TDR (based on unsold area), by the developer und....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er RCM. 📌 Summary Answer * Landowner is NOT liable to pay GST on transfer of TDR under Notification 04/2018. * Developer is liable under RCM, at the time of issuance of OC (2022). * If the project was residential, and units were sold before OC, then no GST on TDR (to that extent). * For any units sold after OC, GST is payable on proportionate TDR by the developer under RCM. *** Reply By YAGAY andSUN: The Reply: Here's a practical example to help you understand how GST on TDR is calculated under a Joint Development Agreement (JDA), especially after Notification 04/2018 and relevant clarifications. 🧮 Example Scenario - GST on TDR (Post-OC Basis) 🏗️ Basic Project Details: * Total Area Develope....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d: 10,000 sq. ft. * Landowner's Share (TDR consideration): 4,000 sq. ft. * Developer's Share: 6,000 sq. ft. * Type of Project: 100% Residential * Date of OC: July 2022 🏠 Sales Status: Portion Area (sq. ft.) Sold Before OC? GST Status Developer's Share 6,000 5,000 sold before OC, 1,000 unsold GST exempt on 5,000, taxable on 1,000 Landowner's Share 4,000 Entirely retained by landowner (assumed unsold) Taxable on entire 4,000 💡 Key GST Rule: Per CBIC Circular No. 151/07/2021-GST dated 17.06.2021, and Notification 04/2018: GST is payable by developer under RCM only on the proportion of TDR used for constructing units sold after OC. 🧾 GST Liability Calculation: Let's assume the market value of co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nstruction attributable to 1 sq. ft. of TDR is Rs.2,500 (you can substitute with real values). 📊 GST Computation on Unsold Area Description Area Rate per sq. ft. Total Value GST Rate GST Payable Developer's unsold units 1,000 sq. ft. Rs.2,500 Rs.25,00,000 5% (residential) Rs.1,25,000 Landowner's units (unsold) 4,000 sq. ft. Rs.2,500 Rs.1,00,00,000 5% Rs.5,00,000 Total GST Payable by Developer under RCM - - - - Rs.6,25,000 📌 Who Pays? * Developer pays Rs.6,25,000 under Reverse Charge Mechanism. * Landowner pays nothing, even though TDR was the consideration. 💬 Important Notes: * If landowner sells flats after OC, then they will pay GST on those sales under forward charge (at applicable....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... rates). * If landowner sells after 5 years of holding, and without development obligations, they might attract capital gains but not GST. *** Reply By YAGAY andSUN: The Reply: You're absolutely right to raise this point - and it's a nuanced one in GST law. Let's walk through the logic you're applying and assess whether GST applies on TDR transferred under a JDA executed before 1 July 2017, with development rights transferred pre-GST, even though the construction and OC occurred post-GST. ✅ YOUR KEY ARGUMENT: "Development rights were transferred before GST was introduced. Therefore, the service (if any) was provided pre-GST, and GST is not applicable." This view is legally supported by case law and circulars in ce....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rtain circumstances. 🔍 RELEVANT LEGAL AND TAX POSITIONS 📌 1. Timing of Supply (Service Tax vs. GST) * If TDR was transferred (i.e., vested in the developer) before 01.07.2017, it's a pre-GST transaction. * In that case, no GST can be levied, even if consideration (constructed flats) is received later. As per Section 142(10) of CGST Act, any supply already taxed under old laws (e.g., Service Tax, VAT) shall not be taxed again under GST. 📌 2. Service Tax Applicability * Service Tax was applicable on JDA only if service was "provided" and "consideration" was determinable. * In many JDAs (esp. where consideration is in the form of constructed flats), service tax was not applicable until possession or construc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion started. * Citing the Delhi High Court ruling in DLF Commercial Projects Ltd. vs Commissioner, ST: Development rights transferred under JDA for consideration in the form of constructed area is a transaction in immovable property, not exigible to service tax. 🧾 APPLYING TO YOUR CASE Event Date Tax Regime Implication JDA Signed 2015 Pre-GST Relevant for Service Tax, not GST TDR transferred (rights vested in developer) 2015 or 2016 Pre-GST GST Not Applicable Construction started 2018 Post-GST Supply by developer to landowner may be taxable OC received 2022 Post-GST GST on unsold units if applicable Therefore, no GST is payable by landowner on TDR, as the transfer was pre-GST and not a taxable service under....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Service Tax either, per DLF judgment. 🔁 Developer's Liability (Post-GST Construction) * GST may still apply on developer's supply of constructed flats to landowner (if post-GST construction). * But that's developer's supply of construction service, not landowner's supply of TDR. ✅ Conclusion: * TDR transferred before 1 July 2017 → No GST on landowner under JDA. * Service tax also likely not applicable (DLF case: transfer of immovable property, not a service). * Developer may be liable for GST on constructed flats given to landowner - under construction service, not TDR. *** Reply By Sadanand Bulbule: The Reply: 2025 (5) TMI 633 - PATNA HIGH COURT - SHASHI RANJAN CONSTRUCTIONS PRIVATE LIMITED VERSUS....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... UNION OF INDIA, CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS, STATE OF BIHAR, ASST. COMMISSIONER OF STATE TAX, MUZAFFARPUR. Challenge to order and summary of order - challenge to N/N. 09/2023 dated 31.03.2023 as contained in Annexure-P8 and the N/N. 56 of 2023 dated 28.12.2003 - extension of time limit specified under sub-section (10) of Section 73 of the CGST Act for issuance of order under sub-section (9) of Section 73 of the GST Act for recovery of tax not paid or short paid or input tax credit wrongly availed or utilized upto 31st March, 2024 for the Financial Year 2018-19 - main contention of petitioner is that the impugned order has been passed without consideration of the provisions of the Act, the rules made thereunder and also not....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ification fixing the liability only in respect of the development agreement on or after 01.04.2019 - violation of principles of natural justice - mistake of fact apparent on the record or not. HELD THAT:- The petitioner does not get any right on the said property until the completion of the project. After the project is completed and completion certificate is issued, the petitioner gets a right to sell the area of the property which is called "Developers Area". There are no substantial material to establish that with execution of the development agreement, the petitioner got ownership in the land. It is held that the transfer of development rights as it stands is amenable to GST and cannot be brought within the purview of sale of land subj....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ect to clause (b) of Paragraph 5 of Schedule II, sale of building (as per Entry 5 of Schedule-III of the GST Act). The petitioner has not controverted the submission of the State that vide notification no. 11/2017 dated 28.06.2017, construction of a complex, civil structure etc. intended for sale to a buyer was made exigible to GST except where the entire consideration has been received after issuance of completion certificate or after its first occupancy, whichever is earlier. In this case, it has been specifically pleaded by the State-respondent that the consideration had been received by the petitioner in the form of transfer of development rights, which happened long before the issuance of completion certificate or first occupancy. Thi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s Court agrees that in this case, the petitioner cannot claim that it had received the consideration after the issuance of completion certificate or first occupancy. The State-respondents are correct in contending that the construction of a complex, civil structure etc. intended for sale to a buyer was made exigible to GST except where the entire consideration has been received after issuance of completion certificate or after its first occupancy, whichever is earlier. There would be no ambiguity in the above-mentioned notifications. Conclusion - There is no ambiguity with regard to liability of the petitioner on account of 'GST' on 'RCM' basis on the constructions services rendered by him in lieu of the developments rights under the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Development Agreement dated 27.11.2014. There are no reasons to entertain the present writ application - application dismissed.<br> Discussion Forum - Knowledge Sharing ....