Transfer of Development Rights under JDA taxable on value of similar flats offered to independent buyers

Last updated: 14 September 2021

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The Tamil Nadu Authority of Advance Ruling (TNAAR) has determined that the transfer of development rights under a Joint Development Agreement (JDA) is taxable. The taxable value is to be calculated based on the price of similar flats sold to independent buyers, not the actual construction cost. This ruling applies even if the agreement was made before a specific amendment, as the time of supply falls after it.

Court :
Tamil Nadu Authority of Advance Ruling (TNAAR)

Brief :
In M/s. ThiruNeelakanta Realtors Ltd [ORDER No. 33/ARA/2021 dated August 17, 2021], M/s. ThiruNeelakanta Realtors Ltd ('the Applicant') has sought clarification on mainly two issues. The first issue pertains to applicability of paragraph 2A of Notification No. 03/2019-Central Tax (Rate) dated March 29, 2019('Notification No. 03/ 2019') on agreements entered into with unregistered persons before September 29, 2019 whereas the second issue deals with applicability of the said notification i.e Notification No. 03/2019 on valuation when the actual cost of construction of services is known. The Applicant relating to the above issues have further sought clarification about which valuation rule would apply in the prevalent case to identify value of supply and the consequence, if Rule 30 or Rule 31 of the Central Goods and Services Tax Rules 2017 ('the CGST Rules') is to be adopted by the Applicant.

Citation :
ORDER No. 33/ARA/2021 dated August 17, 2021

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1 Year PLAN

1999

(Excl. of GST ₹359)

BEST VALUE

2 Years PLAN

3499

(Excl. of GST ₹629)

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Judgement posted by

Bimal Jain

Service

FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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