If we consider the definition of the real estate project (in accordance with Section 2 (zn) of the RERA Act, it includes the development of land in the land. The other GST Act also recognizes this definition in the context of RERAs for the purposes of taxing real estate projects. This definition could therefore perhaps attract the attention of the authorities when it comes to taxing the sale of building land. The developer enters into sales/construction contracts with home buyers for the supply of work. GST applies to the real estate transaction, the developer provides construction services to a home buyer. Aspects relating to the applicability of GST to real estate transactions in the real estate sector are addressed in the following article: After April 1, 2019, the real estate sector changed considerably in terms of the impact on GST. It is therefore important to rethink the law, to understand the effects of taxation and other aspects in order to a common development agreement. Joint development agreements are generally concluded either on the basis of revenue distribution or on the basis of land distribution. In this article, we will take a walk through the provisions of the land-sharing agreement. JDA helps both the developer and the owner of the land with an initial investment for the fund-raising, partially avoiding stamp duty, the accelerated development of the property as capital is necessary only for the execution of the construction work, consideration for the lessor will be paid most often after the completion of the project. The AAR pointed out that the taxpayer`s primary jurisdiction in the transformation of raw land into a well-developed residential complex and not in the sale of land. Activities include measuring the land, establishing a detailed map of the proposed layout, evacuating/levelling the land, constructing roads, designing and creating common equipment, etc.
The land sales activity is incidental to the main activity of the development of the land. In addition, several provisions of the agreement indicate that the taxpayer is not entitled to the property and is therefore not involved in the sale of land in accordance with Annex III of the CGST Act. With respect to valuation, Rule 31 of the CGST rule applies and the value of the delivery is 25% of the market value of each building received by the subject. In many parts of the country, there is a practice, with separate registers for land and separate for flat constructed. In such cases, therefore, there is often an evaluation problem. In the case of IN RE: M/S. KARA PROPERTY VENTURES LLP 2019 (3) TMI 924 – AUTHORITY FOR ADVANCE RULING, TAMILNNADUthe assesse has entered into two separate agreements, one for the sale of one share of undivided land and the other for the construction of complex services to the buyer, two separate counterparties being charged by the purchaser. A question was therefore asked about the tax measure. The AAR found that the two agreements co-exist and work simultaneously; Any agreement cannot be terminated without terminating the other. This is a single fully covered supply in 5 (b) Of Schedule II of the Central Goods and Services Tax Act, which makes this operation a “complex building” service, and therefore assumes that the GST can be collected 2/3 of the total value of the two agreements. The value collected by the lessor on the delivery of TDR or open market value (perceived by the government during the collection of stamp duty) if such a TDR agreement has been entered into is charged. In similar lines, in the case of the JDA sharing area, GST is payable on an RCM basis by the developer, on the acquisition of development rights.
The load and applicability are the same as those of the cost-shared JDA discussed above. The tax impact on the first part of the transaction, i.e. the transfer of operating rights, is as follows: In this case, the owner of the tax and land ownership closed a JDA for the development of residential land and amenities.