Posted on September 22, 2021
Gst On Real Estate Development Agreement
The parties to these agreements are as follows: Assessment of development rights – Communication 04/2019 – Value of the service by transfer of development rights or ISPs by a person to the developer in return for residential or commercial housing is considered equivalent to the value of similar housing invoiced by the developer to independent buyers, whichever is closer to the date on which those development rights or ISPs are transferred to the organiser. In many parts of the country, there is a practice of having a separate register for land and separate housing for built housing. Thus, in such cases, an evaluation problem often arises. In the case of IN RE: M/S. KARA PROPERTY VENTURES LLP 2019 (3) TMI 924 – AUTHORITY FOR ADVANCE RULING, TAMILNADUTHE Assessee has entered into two separate agreements, one for the sale of a share of unshared land and the other for the construction of a complex service to the buyer, with two separate considerations being required of the buyer. That is how a question was raised about the tax measure. The AAR decided that the two agreements were coexisting and ongoing simultaneously; Any contract cannot be terminated without the termination of the other, it is a single delivery, which falls entirely under entry 5 (b) of Schedule II of the Central Goods and Services Tax Act, which makes this transaction a „complex construction“ service and it is therefore established that the GST can be raised to 2/3 of the total value of the two agreements. In order to clarify the doubts of the real estate sector following the introduction of GST regarding the applicability of GST to joint development agreements, the Government has issued a communication on this subject. The central point of the GST communication is as follows: in addition, the applicant owned by the Authority cannot be considered a seller of land, since the ownership and ownership of land belongs to the owner of the land and not to the applicant and the land development activities by the applicant are limited to the provision of services to the owner of the land, for which the applicant is entitled, 25% of the revenue from the sale of land. In this case, the revenue sharing agreement provides that the applicant receives an amount for the sale of each piece of land. This shows that there are no specific fixed plots to which the applicant is entitled. In addition, the amount received on the sale of the land is credited to a fiduciary account and is only divided.
This shows that the claimant does not own the land and therefore cannot claim the sale of the land as well as its delivery. As a result, the Authority decided that the participation in the revenues collected by the developer was subject to the GST tax, which is the provision of services to the landowner. Some of the industry loyalists do not agree with the taxation of these transactions under the GST regime, as these transactions were not taxed under previous tax regimes. We believe that some important points that are taken into consideration by AAR must be taken into consideration before formulating a joint development agreement, first, the applicant was not the owner of the land, secondly the applicant`s land was not provided, thirdly, the applicant provides services to landowners and landowners alone to apply to government authorities to obtain sanctioned plans. . . .