Applicability Of Service Tax And Gst On Joint Development Agreement

Subsequently, CBDT issued another Circular No 151/2/2012-ST of 10/02/2012, specifying that, for the period preceding 01.07.2010: the work of the contracting authority/developer is not taxable within the meaning of Circular No 108/02/2009-ST of the Board of Directors of 29.01. 2009. The same circular clarified that, for the period following 01.07.2010, the construction service provided by the contracting authority/developer is taxable if part of the payment/development rights of the land was received by the contracting authority/developer before the issuance of the certificate of completion and the service tax was also paid by the contracting authority/developer for the dwellings transferred to the owner. 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. – the developer enters into an agreement with a landowner in which the right to develop the land is transferred permanently and irrevocably from the landowner to the developer; For transactions between landlords and developers, there is usually no billing system. Therefore, on the three events listed above, the date of receipt of the consideration or the date of completion of the service in the case of JDA would be relevant. Under Rule 3 of the Point of Taxation Rules-2011, it could therefore be argued that the tax point is the date on which the developer/developer obtains the development rights, since the developer obtains ownership of the land.

However, the CBDT had caused confusion on the point of taxation by applying Circular No Regulation (EC) No 151/2/2012 provides that the service tax on services provided by developers/developers to landowners must be paid at the time when ownership or ownership of such dwellings is transferred to the owner of the land. Most of the time, this point of view is accepted by the department. It shows that Circular No. 151/2/2012 does not comply with Rule 3 of the checkpoint. BT Associates is a leading indirect tax consultant in Kolkata, providing its clients with quality services in the field of indirect taxation. GST idea is a unit of BT Associates that was created to share knowledge about stakeholders. We cover the entire range of technical documents up to recent developments, including computing under GST That is why, in this article, we have discussed at length the nature of „development rights” and analyzed the ability to control these transactions under the Service Tax Act. I did a JDA with Builder in 2016 (before GST). Now the client demands to pay him GST for his services provided up to 18%. . .

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