Joint Development Agreements (JDAs) are a common structure in Indian real estate, where a landowner contributes land and a developer constructs the project in exchange for a share of the developed area or revenue. The GST treatment of JDAs has been a subject of significant litigation and controversy.
This article explains the GST implications of JDAs between landowners and developers.
The Structure of a JDA
In a typical JDA:
- The landowner contributes land (or development rights) to the project.
- The developer constructs the project at its own cost.
- The landowner receives a share of the developed area (flats) or revenue.
- The developer receives the remaining area for sale.
GST on the Landowner's Contribution
The landowner's contribution of land or development rights to the developer is treated as a supply of services under GST. The developer is liable to pay GST on this supply under RCM at 18%.
The value of the supply is determined based on the value of the constructed area given to the landowner or the market value of the development rights.
GST on the Developer's Construction Services
The developer's construction services are treated as a supply to the landowner in exchange for the land. This is a barter transaction , and GST is payable on the value of the construction services.
Recent Judicial Developments
- Bombay High Court (Goa Bench, 2025): Held that GST is not applicable on construction services under a JDA once the developer becomes the legal owner of the property through conveyance.
- Patna High Court (2025): Ruled that GST is applicable on RCM basis on the transfer of development rights from a landowner to a builder before the completion certificate is issued.
These conflicting rulings have created uncertainty in the industry.
ITC for Developers
Developers can claim ITC on GST paid under RCM for the landowner's contribution, provided the construction is for taxable supplies. If the project is for sale of residential apartments at concessional rates (1% or 5%), ITC is restricted.
Compliance for JDA Projects
- Determine the GST liability on the landowner's contribution.
- Pay GST under RCM if applicable.
- Report the transaction in GSTR-1 and GSTR-3B.
- Claim ITC on eligible costs.
- Maintain proper documentation for all JDA transactions.
- Monitor judicial developments and seek professional advice.
Conclusion
JDAs raise complex GST issues regarding the taxability of the landowner's contribution, the developer's construction services, and ITC eligibility. Given the conflicting judicial rulings, developers and landowners should seek professional advice to structure their transactions appropriately.
At Anuj Desai & Associates, we provide expert advisory services on GST for JDA projects, including RCM compliance, ITC claims, and representation before GST authorities. Our team can help you navigate the complexities of GST on JDAs.
For a confidential consultation, contact us at office@anujdesaiassociates.com or call 9619456656. Visit our website at https://anujdesaiassociates.com or connect with our founder on LinkedIn at linkedin.com/in/ca-anuj-desai-122547230.