3.6 In light of the above, the applicant considers that gst development rights transfer transactions are taxable and the tax return must be made to determine the tax rate. GST rates for services are prescribed in Communication 11/2017- Central Tax (rate) of 28.6.2017, without specific mention of additional TDR/ISF transfer services. The JDA/FSI GST was largely clarified in its recent judgment by the Karnataka Authority for Advance Ruling, but it should be noted that it binds the applicant and its manager. Therefore, given that the GST plan is in its development phase, decisions can be seen as a great relief to proponents. Nevertheless, there is hope that CBIC will decide to bring more clarity to the subject. In JDA, the landowner transfers the operating rights to the developer and the developer of the construction agrees to build and give the landowners a certain agreed construction area free of charge. Although paragraph 2 and 2A of application 11/2017 CT (R) (in the T.A. version amended by NN 03/2019) requires that the amount charged to the independent buyer for the value of a similar dwelling be the value of the work the developer provided to the lessor. But such a value seems excessive and inappropriate. Indeed, the open market value of similar dwellings also includes the value of the land. In addition, the land on which the developer`s construction activity is carried out and transferred to the landowner is already the property of the owner. In such cases, the value of the work will not be similar to that of the construction of “free housing”. It is also relevant to mention here that developers usually return the value of the country by the actual buyer who paid for it.
The value of the land is not divided between the dwellings/surfaces for sale only between the dwellings/surfaces that are left to the free owner of the land. Also, the developer causes huge marketing and other expenses that are only recovered by apartment/surface buyers. Thus, the price charged to the buyer will of course be much higher than the actual cost of carrying out the construction provided to the owner of the land. The deduction of only 1/3 because of the value of the land in such a scenario therefore results in an exorbitant value of these services. The author believes that, in such cases, the assessment should be carried out either after deducting the real value of the land or on the basis of construction costs plus 10% of this amount, as stipulated in Rule 30 of the 2017 CGST rules.