Gst Implication On Joint Development Agreement
With this update, we would like to list the provisions relating to the delivery date and the evaluation of the service with regard to joint development contracts. It is important to mention that there is no explicit provision for joint development agreements. Therefore, the delivery date is determined on the basis of the most appropriate clause. In accordance with Section 12(2) of the CGST Act, 2017, the date of delivery of the goods is the old of the following:- • the date of invoicing by the supplier or the last date on which it is to issue the delivery invoice or • the date on which the supplier receives payment for the delivery. Since no invoice is issued to the developer and it is also clear that development rights will be transferred to the developer prior to the commencement of work, it can be inferred that the consideration is received in kind by the proponent even before construction begins. Therefore, it can be considered that the developer is required to pay the GST for the apartments that the owner of the land has already granted before the start of construction, which will prove to be a great harshness for the developers. Point 15 of the 2017 CGST Law, in conjunction with Rule 27 to 35 of the 2017 CGST Rules, is now the evaluation element. It should be noted that there is no explicit provision for the valuation of housing granted to landowners under a joint development agreement. Therefore, the most appropriate rule must be applied. Rule 27 of the 2017 CGST Rules provides that if the value of the delivery of goods or services in exchange for consideration is not entirely in cash, the value of the delivery is the open market value of that delivery.
When the value of the open market is not available, it is determined as a total consideration in money or equivalent. If the value cannot be determined by these formulas, it is the value of the supply of similar goods/services. . . .