Liability w.r.t. JDA entered prior to GST
By: – Shilpi Jain
Goods and Services Tax – GST
Dated:- 18-12-2018<\/p>\n
Joint development agreement (JDA) is an agreement entered between the landowner and the developer wherein the landowner would provide the right to the developer to develop the land, in return for construction services to be provided by the developer.The developer would be entitled for a share in the developed property(generally allotted through supplementary agreement (SA))in return for such construction services. Without getting into whether GST is liable or not on these activities, let us examine what is the levy that needs to be examined i.e. GST or Service Tax, for such agreements in the below scenario.
\nLet us take a scenario, wherein the JDA is enteredprior to 01.07.2017 and the SA is entered in the GST regime. Since, the two agreements are entered in periods where two different taxeswere liable, a question would arise regarding, the liability of which tax h<\/p>\n
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Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n harging section which provides that the service tax shall be levied on all taxable services provided or agreed to be provided in the taxable territory, other than those covered under the Negative List u\/s 66D of the of the Act. Here the activity to be examined is the construction services provided by the developer to the landowner, whether this would be a service or not. If yes, whether on the date of entering into the JDA, the levy would be attracted or not? = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n e invoice is not issued within the time specified in clause (a). = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n under GST, no service tax would be payable. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" Liability w.r.t. JDA entered prior to GSTBy: – Shilpi JainGoods and Services Tax – GSTDated:- 18-12-2018 Joint development agreement (JDA) is an agreement entered between the landowner and the developer wherein the landowner would provide the right to the developer to develop the land, in return for construction services to be provided by the developer.The … Continue reading “Liability w.r.t. JDA entered prior to GST”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-15557","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/15557","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=15557"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/15557\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=15557"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=15557"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=15557"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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\nThe term “Service” is defined u\/s 65B (44) of the Service Tax Act, to mean any activity carried out by a person for another person for consideration and includes declared services. On perusal of the declared services, clause (b) and clause (h) of section 66E of the Service Tax Act are relevant which are as under:
\n * Clause (b) provides “Construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the consideration received is <\/p>\n
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\n * Date of payment.
\nFurther, even though the services provided by the developer are for a longer period of time, since there are no periodic payment obligations other than the requirement of handing over the units, it cannot be said to be a continuous supply of service. However, with respect to construction services between the landowner and the developer, there would not be any system of issue of invoices. Therefore, the PoT would be the date of completion of the service or receipt of payment (i.e. receipt of right or possession of land\/development rights).
\nIn the case of JDA, the consideration received by the developer is the development rights and the agreed share of land or undivided share of land. The said consideration crystallizes when the SA is entered into, where the specific units belonging to the developer are identified and after such date, the developer would have right over his units to enter into sale ag<\/p>\n
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\nThereby, it seems that in case of JDAs entered prior to GST, where the SA is entered into after 30.06.2017, no tax liability could exist.
\nThe article has been written by CA. Shilpi Jain and Hema Muralidharan. For any queries mail @ shilpijain@hiregange.com.
\n Reply By Praveen kumar as =
\nWe have a piece of land and we entered into a JDA on Year 2016 (Prior to GST Implementation, July 1st 2017) and Entered Supplementary Agreement, SA in October 2017 for the development of it with a reputed builder.
\nThe land was bought by my grand father in 1957.
\nThe same has been inherited by my father (current sole owner) and he entered into this JDA.
\nAs per JDA we will be getting 7 flats as part of JDA.
\nNow my questions are
\nWhat is the Capital Gain Tax we have to pay once the possession is given to my father by the builder?
\nEven if we not sell any flats still on getting possession do we need to pay Capital Gains Tax?
\nIf we need to pay capital gain <\/p>\n
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