In the case of a joint development contract, the owner of a land or building transfers his or her operating rights to a contractor or developer for the development of land and a building. In this agreement, development rights in land/building transfers to the builder/developer and this act raises capital gain liability. The main feature of JDA is that the landowner and developer is responsible for obtaining permits, real estate development, launching and marketing the project with its financial resource. As a result, collective development agreements in the real estate sector are widespread in India. In this article, we examine in detail the applicability of the GST to the Joint Development Agreement. In the previous update, we have put at stake the fiscal viability of common development agreements under the GST regime. With this update, we would like to list the provisions relating to the delivery date and evaluation of the service in relation to the joint development agreements. It should be noted that there is no explicit provision for common development agreements. As a result, the delivery date is determined on the basis of the most appropriate clause. In accordance with Section 12 (2) of the CGST Act, 2017, the delivery date of the goods is the previous date:- The date the supplier has to pay or the last date on which the supplier must issue the delivery invoice, or the date on which the supplier receives the payment with respect to the delivery. Since no invoices are issued by the developer to the landowner and it is also clear that development rights are transferred to the developer before the developer begins construction, it can be concluded that the consideration is paid by the owner in kind even before construction begins. Therefore, it can be argued that the developer is required to pay GST for the units that must be allocated to the owner before construction begins, which will prove to be a great deal of hardship for developers. Here is the evaluation aspect that is indicated in accordance with Section 15 of the CGST Act, in 2017, with Rule 27 to 35 of the CGST rules, 2017.
It should be noted that there is no explicit provision for the assessment of housing granted to landowners under a common development contract. The most appropriate rule should therefore be applied. Rule 27 of the 2017 CGST scheme states that if the value of the supply of goods or services is not entirely in cash for consideration, the value of the delivery is the open market value of that delivery. If the open market value is not available, it is determined as a total amount of money or equivalent. If the value is not determined by this formula, it is the value of providing identical goods/services. According to the above provisions, the value of the land given to the landowner is the open market value which, at the time of the transfer of common operating rights, is the value of the dwellings. For example, at the time of the sale of common operating rights, the developers sold 10 apartments at the price of Rs. 30.00,000/- then the value of the apartments to be given to the owner of the land will be valued on Rs.
30.00,000/-. However, if the open market value is not available, the value of the dwellings is, at about the same time, that of the same nature and quality. Suppose the value of the apartment in the range of the same specification is 32.00,000/- the value of the dwellings given to the landowner is assessed with Rs.