My family had inter in joint development agreement with one builder (developer) in 2008, with respect to our joint ancestral property . But developer does not completed the construction work till today and he is out of time limit according to our development agreement . But Now developer is saying that he is ready to complete the contract and know he will start construction activity from current year. If he start construction work today and complete in future then following are my questions:- 1) whether I will get benefit of section 45 (5A) on joint development agreement of 2008. 2) whether I will get benefit of exemption given in section 54. On completion of construction work done according to joint development agreement of 2008. 3) whether my tax liability will start on completion certificate. 4) till which year we will get benefit of indexation to calculate acquisition cost of property. Whether it will be till 2008 that is date of joint development agreement. 5) weather I have to enter with developer in a fresh new development agreement to minimise taxation liabilities And for clearly or undisputedly get benefits of section 54 examinations and benefit of section 45 5A and benefit of of indexation but only problem for this is that builder will have to pay new stamp duty for new fresh development agreement So I want advice from the the benefit of landowners prospective.
1) yes you can take benefit of section 45(5A)
2) Benefit of exemption u/s 54 would be available on actual sale of the property.
3) yes
4) till the year of cc
5) that would be better from GST perspective
For detailed discussion,please take phone consultation.
Sir please let me know how new agreement would be beneficial for GST
Dear Sir,
Hope you are doing well !!
Yes, new agreement would be beneficial form GST perspective.
GST is though applicable to the supply of development rights, w.e.f.01.04.2019 the responsibility to pay tax is no more in the hands of the landowner, rather it is shifted to the builder under reverse charge mechanism (RCM). It is immaterial whether the landowner is registered under GST or not. So it can be construed that transfer of development right is not taxable in the hands of landowner w.e.f.01.04.2019. [Notification No. 13/2017-CT (R) dt. 28.06.2017 as amended by Notification No. 05/2019-Central Tax (Rate)] Dated: 29th March 2019]
In cases where landowner further sales his share of constructed area or flats allotted by the builder and he receives any amount as advance from the prospective buyers during the construction stage then the landlord will be liable to pay GST on it. No GST is applicable if such sales are made after completion of construction.
Rate of tax –
In case of further sales of area/flats by the landowner, he will be liable to pay tax @ 1% or 5% depending on the nature of the residential apartments viz: affordable or non-affordable category. However, if the developer opted for the existing system of 8%/12% then the landowner has also to opt for the same. (Refer FAQs dated: 14.05.2019). Further, he is also entitled to claim ITC charged by the builder in both the situation (old rates and new rates) on the consideration value against the transfer of development right in land.
We may assist you in entire procedure.
It is advisable to take a phone consultation for detailed discussion.
In case of supply of TDR on or after 01.04.2019, GST liability will be borne by the supplier on RCM basis on the unbooked units on the date of CC or first occupation whichever is earlier.