Let`s take another example, Mr. X has a field and some slam residents have invaded his country. Now, the government, through its slum development scheme, has turned to Mr. P. for the development of his land for slum dwellers. Mr. P. receives « transferable development rights » from the government in return. Mr. P may use these « transferable development rights » in any country, subject to certain conditions. Girnar Traders Vs State of Maharashtra (2011)3SCC: stated that the right of rural development is a right to develop or develop the country, the building or both. It is therefore a benefit that derives from DemLand and is therefore included in the definition of the country.
The main feature of JDA is that the landowner contributes to the land and the developer assumes responsibility for obtaining permits, real estate development, launching and marketing the project with his financial resources. Therefore, joint development agreements are widespread in the real estate sector in India. In this article, we take a detailed look at the applicability of the GST on Joint Development Agreement. After the introduction of GST, the tax will apply during the transfer of development rights. Therefore, any transfer of development rights, real estate and real estate is considered a service. In addition, any transfer of a built area in the form of an apartment or house must also attract GST. In the real estate sector, it is common for landowners and developers to come together and develop real estate together. It helps developers reduce financing needs for land acquisition and share the economic risk and benefits of the project with the landowner. The Joint Development Agreement (« JDA ») is structured differently to meet the requirements of both parties, and the most common is the area-share agreement, the income-sharing agreement, or the combination of the two in combination with a pre-filing. In the case of a joint development agreement, the owner of a land/building transfers his development rights to a developer or developer for the development of a project on the land and building. In this agreement, the rights to develop land / buildings are transferred to the client / developer, and this law increases the obligation of capital tax.
JDA assists both the developer and the landowner, as well as the initial investment for the acquisition of land, partly avoiding stamp duty, accelerating the development of the property, as the capital is only needed for the execution of the works, in return for the lessor, which must be paid mainly after the completion of the project. CONCLUSION: It is clear from the above discussion that the sale/transfer of development rights is not considered a « delivery » in accordance with the provisions of the Goods and Services Tax Act 2017 and is therefore not taxable. But in the income tax law, it is considered a transfer of capital and therefore taxable as capital gains tax u/s. 45. The central government has postponed the tax period by introducing provisions in Section 45(5A) of AY 2018-19, which provides that the capital gain is taxable in the year in which the graduation certificate for part or all of the project is issued by the competent authority. In many parts of the country, there is a practice of having a separate register for the land and a separate one for the built apartment….