Joint Developement Agreement

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This discussion clarifies the Goods and Services Tax (GST) implications for a Joint Development Agreement (JDA) where one party provides land and the other constructs commercial premises. The consensus is that GST payable by the landowner (A) is calculated based on the market value of the allotted premises on the date of the completion certificate, as per Rule 27 and Section 15 of the CGST Act, 2017, rather than the construction cost incurred by the developer (B).

HIMANSHU

HIMANSHU (Querist)

20 July 2022 A has entered in to Joint Development Agreement (JDA) with B for construction of 100% commercial premises on his land. B has allotted area to be constructed on the said plot. B has not given any monetary consideration to A against the JDA.

Query :
1. GST payable by A will be calculated on the cost of construction incurred by B for constructing the premises to be allotted to A
OR
2. On the market value of the premises on the date of obtaining Completion certificate from the Municipal authority.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

20 July 2022 Ans, 2 is correct...
Valuation shouls be as per Rule 27 of the Central Goods and services Tax Rules, 2017 read with section 15 of CGST Act, 2017.

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