Joint Development Agreement Taxation

CA. Vinay V. Kawdia provided an interesting overview of the tax legislation of the Joint Development Agreements (JDA). He identified the many controversies that are not there. He presented a clear analysis of the legal provisions and provided practical examples to explain their impact. A lot of important court precedents have also been mentioned as the CA exercise in the real estate sector, your thinking on land development is really appreciated. Let`s take an example: Mr. X has turned his capital-owned country into F.Y. 2019-20 into a trade stick.

In F.Y. 2020-21, he entered a JDA registered with developers and handed him the ground for development. The defining terms of the JDA were: if one considers the definition of the real estate project (in accordance with Section 2 (zn) of the RERA Act), it takes up the activity of land development. The other GST Act also recognizes this definition in the context of RERAs for the purposes of taxing real estate projects. This definition could therefore perhaps attract the attention of the authorities when it comes to taxing the sale of building land. The taxation of capital income in the hands of the landowner, resulting from the transfer of land from the landowner to the developer in a JDA, has always been a matter of controversy. The JDA model is often questioned by evaluators because the tax obligation is not clear in the hands of landowners and the amount of the taxable consideration is also determined by the landowner. – Owners are keen to build a building on this land, but due to experience no longer on good experience in the construction and development of land, The same facts and circumstances of the case in issue should be analyzed independently, without objecting to the authority of the various positive/unfavourable judgments that apply to the development of the promoter without placing itself under the responsibility of the various positive/unfavourable judgments, and it is necessary to be sufficiently careful when developing the development agreement and planning the overall cases, so that the evidence prevails without the courts dealing with the actual form or intentions of the parties. When the landowner transfers the land as a commercial portfolio under the JDA, instead of certain % of the built-up area (housing, stores, etc.) that must be purchased from the developer and are prepared to sell the same thing as a commercial stock in the future, the applicability of the relevant accounting standards/ICDS must be carefully considered, in addition to the guarantees described above.