Taxation of Joint Development Agreements & Real Estate Transactions by CA. L. VENKATRAMANAN, CA. SATYADEV PUROHIT – Edition 2024

Description

Taxation of real estate transactions had been a very complex subject even in the era of General Sales Tax, Value Added Tax, and Service Tax regime. The Goods and Services Tax regime is no exception. Taxation of Joint Development Agreements (JDA) is one of the important aspects under the Taxation of Real Estate Transactions under the GST regime. Under these Agreements, various transactions are involved i.e., transfer of land or development rights by the land owner to a Builder or Developer, construction of real estate project by the Builder/developer himself or outsourcing such work to an outside contractor, transfer of flats/shop/commercial units or constructed area to land owner by the builder/developer, as mutually agreed upon.

Under the Goods and Services Tax law, specific provisions have been made for levy and collection of GST on real estate transactions, in particular Joint Development Agreements. Specific rates of tax relating to real estate transactions have been prescribed under Notification No. 11/2017-Central Tax (Rate), dt. 28-6-2017. Some transactions have been exempted by including the same under Notification No. 12/2017-Central Tax (Rate), dt. 28-6-2017 and certain inward supplies received by a Promoter from unregistered persons are made chargeable to tax on reverse charge basis under Notification No. 13/2017-Central Tax (Rate), dt. 28-6-2017.

With a view to cover entire gamut of levy and collection of GST as well as Income-tax on the real estate transactions, in particular, Joint Development Agreements, the present book has been conceived and written so as to satisfy the needs of the practising Chartered Accountants, GST Consultants and Tax Practitioners, engaged in their niche practice of taxation of real estate transactions.

For ease of convenience, the book has been divided into the following six parts, namely;

Part I of Book contains about 15 chapters covering various aspects of levy of GST on Joint Development Agreements viz., Meaning of supply, Place and Time of Supply, Composite and Mixed Supply, Construction of Immovable Property Transactions, Transactions Exempt from GST.

Part II of the Book contains specific chapters vis-a-vis JDA Model discussing the GST liability of Land Owner, Developer and Contractor. It also contains chapters on GST liability in respect of Residential Apartments, Commercial Apartment and Residential House and also GST Liability on Works Contract Services.

Part III of the Book discusses the procedures relating to registration, filing of returns and maintenance of books of account by a Land Owner, Developer, Contractor, etc.

Part IV of the Book provides an overview of income tax implications on the real estate transactions including Joint Development Agreements. The provisions relating to computation of Capital Gains as well as income from Business in respect of Builders, Developers and contractors have been discussed at length. Some Practical Queries with Opinions have also been provided on taxation of land development agreements. Specific discussion has also been made in respect of deduction under section 80-IBA of the Income-tax Act, 1961 in respect of Profits from Development of Housing Projects.

Part V of the book provides an overview of the provisions of the Real Estate (Regulation and Development) Act, 2016 (RERA) and its implications on the real estate projects. This part contains as more as 15 chapters covering an analytical study of various statutory obligations of promoters/builders under RERA.

Part VI of the Book titled “Appendix” contains full text of the relevant Statutory provisions under the Central Goods and Services Tax Act, 2017 as well as the Central Goods and Services Tax Rules, 2017. The full text of the Real Estate (Regulation and Development) Act, 2016 has also be reproduced. In addition, full text of the relevant Notifications, Circulars and FAQs referred to in the book have been reproduced under this part. At the end some sample Land Development Agreements have been provided as a guidance for preparing such agreements.