Tax liability on joint venture for apartment complex

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Anurag Pundeer (Querist)

28 July 2019 Hi,

I am entering into a joint venture with a builder to construct and sell apartments. I am the landowner. The builder will bear the expense of all relevant approvals, construction, inspection and I will get a share of the revenue from sale of apartments.
What will be my tax liability for this project:
1. Will there be any GST liability? If yes when will it be due.
2. What will be the income tax liability for me and when will it be due? I have owned the land for 10 years.

Thanks,
Anurag

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

28 July 2019 1 GST liability will be there when flat is sold before receiving completion certificate
2 You are liable for capital gains tax on the date of JV agreement considering market value of the land and deducting indexed cost.
3 Joint venture profit will be taxed at 30% as AOP. Share of profit not be taxable again.

Anurag Pundeer

Anurag Pundeer (Querist)

28 July 2019 Hi,
Thank you for the prompt reply and advice. I have a few clarification:
1.How is capital gains tax due when I have not received any payment or no construction has started. If for some reason we don’t get approvals to build will my capital gain tax be refunded?
2. I will sell the flats when they are completed , pay the taxes and remit builders percentage to his account.
3. What amount will be treated as profit from Joint venture?

Thanks.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

29 July 2019 1 Pay tax when you sell the flats.
2 Yes.
3 Balance amount after deduction of construction cost and value of land considered for capital gains.

Anurag Pundeer

Anurag Pundeer (Querist)

29 July 2019 Thanks a lot for the valuable advice.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

29 July 2019 Welcome..........................

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