GST calculation for multi floor commercial building delivered by builder as part of JDA

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63 Points Posted on 18 February 2024

Facts:

5 floor commercial building delivered to landlords under JDA agreement by builder. GST to be paid since occupation certificate certificate received by landlords from local govt authority
Per sqft price differs from each floor to floor

Question:

If the entire GST to be paid by landlords is to be calculated based on per sqft price of ground floor then it will overstating the value of the delivered property and hence a very high GST amount to be paid.

How should the value be calculed for the purpose of paying GST ?
Are there any case laws of any tribunals or high court dealing with this subject matter ?

Kindly provide guidance.

Replies (2)

Quick Summary

This discussion addresses the correct calculation of GST for a multi-floor commercial building developed under a Joint Development Agreement (JDA). The core issue is how to value the landlords' share when the per-square-foot price varies by floor. The consensus is that GST should be calculated based on the actual transaction value or cash consideration for each floor, reflecting its individual market worth, rather than using a single ground-floor rate which would overstate the property's value. Guidance suggests referring to Rule 27 of the CGST Rules, 2017, and Section 15 of the CGST Act, 2017 for accurate valuation.

Kishor Lulla

656 Points Posted on 19 February 2024

Each floor rate to be applied for land owners share for each floor. that will be correct valuation . Similar rate. No decision. lullakishor @ gmail.com for any query on real estate.

Money Money

307 Points Posted on 19 February 2024

About GST on joint development agreements (JDA) for commercial buildings. 😊

the GST on JDA is charged at 18% on the value of the contract. A JDA is a contract between a real estate developer and the landowner to build projects on the latter’s land. As per the contract, the landowner provides the land, and the developer manages the construction side of the project.

The value of supply for GST purposes should be determined as per Rule 27 of the Central Goods and Services Tax Rules, 2017 read with Section 15 of the CGST Act, 201723. The value should be based on the actual transaction value or cash consideration received. The time of supply is the date of transfer of possession or right in the constructed complex, building or civil structure, to the person supplying the development rights by entering into a conveyance deed or similar instrument2.

Therefore, the GST to be paid by the landlords should be calculated based on the actual value of the delivered property, not the per sqft price of the ground floor. The actual value may vary depending on the floor, location, amenities, and other factors that affect the market price of the property.