Quick Summary
Most members of the Group of Ministers (GoM) of the Goods and Services Tax (GST) Council have indicated they are not in favor of providing any tax relief to the real estate sector concerning Joint Development Agreements (JDAs). Despite ongoing deliberations, the GoM is expected to maintain the curre
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FAQ :
Most members of the Group of Ministers (GoM) have indicated they are not in favour of providing tax relief to the real estate sector concerning JDAs. The current GST rate structure is expected to be maintained.
For JDAs executed after April 1, 2019, GST rates were revised to 1.5% for affordable housing and 7.5% for non-affordable housing, with no Input Tax Credit (ITC) benefits for developers.
The removal of ITC for JDAs executed after April 1, 2019, has resulted in increased project costs for developers. They are advocating for its restoration to make the tax burden more manageable.
The GoM is deliberating on whether JDAs should attract GST at all, the reintroduction of ITC benefits, the taxability of development rights and units given to existing members in redevelopment projects, and the valuation of land for GST purposes.
Currently, a one-third deduction is allowed for under-construction property sales. Developers argue this doesn't accurately reflect land costs, especially in expensive metro cities, and are pushing for location-based or actual basis deductions.
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