GST Payable On Transfer Of Land Development Rights Under Joint Development Agreement: Telangana High Court

The Telangana High Court has held that Goods and Service Tax (GST) is payable on the transfer of land development rights under a joint development agreement (JDA).

The bench of Justice P. Sam Koshy and Justice Laxmi Narayana Alishetty has dismissed the writ petition filed by the real estate developer assailing the imposition of GST on the transfer of land development rights (TDR) on JDA for residential projects.

The petitioner/assessee, Prahitha Construction Private Limited, is a real estate developer. The assessee sought relief from GST on the transfer of land development rights to developers under a JDA.

In India, joint development agreements are a common way to develop real estate. For these kinds of agreements, the GST rates are 18% with input tax credit until March 31, 2019, and 1.5% or 7.5% without input tax credit from April 1, 2019.

The assessee contended that development rights to developers should be treated similarly to the sale of land, which is not subject to GST.

The court upheld the applicability of GST on the transfer of development rights under a JDA, distinguishing it from the sale of land.

Case Title: Prahitha Construction Private Limited vs Union of India and 3 others

Case No.: WP/5493/2020

Click Here To Read The Order