March 21, 2023

Introduction of Joint Development Agreements [JDA]:

JDA stands for Joint Development Agreement, which is a legal contract between a landowner and a real estate developer. The agreement is signed for the development of the land by the developer in exchange for a share of the developed property.

Under a Joint Development Agreement, the landowner retains the ownership of the land, while the developer takes on the responsibility of developing the property. The developer bears the cost of construction, obtains necessary permits, and sells the developed property. In return, the landowner receives a share of the developed property, usually in the form of cash or a share of the built-up area.

The terms of a JDA are usually negotiated between the landowner and the developer, including the duration of the project, the share of the property to be received by the landowner, the responsibilities of the parties, and any penalties or liabilities in case of default or delay.

The JDA is a commonly used mechanism in the real estate industry, particularly for large-scale development projects. It provides a win-win situation for both parties, as the landowner can benefit from the development of their land without bearing the financial risk, while the developer can benefit from the opportunity to develop a property without having to own the land. However, it's important to ensure that the terms of the JDA are clear and well-documented to avoid any disputes or legal issues in the future.

Is GST applicable on Joint Development Arrangement (JDA)

Yes, GST is applicable on Joint Development Arrangements (JDA) if the developer is a registered taxable person under the GST law. As per the GST law, any supply of goods or services, including construction services, is taxable under GST unless specifically exempted.

Under a JDA, the developer provides construction services to the landowner, which is considered as a supply of services under GST. The developer is required to charge GST on the value of services provided, and the landowner can claim the GST paid as input tax credit (ITC) if they are registered under GST.

However, the taxability of JDA can be complex, and it may vary based on the nature of the agreement and the roles of the parties involved. The GST law provides certain exemptions and valuation rules for JDA, which the parties must comply with while determining the GST liability.

It's essential for both the landowner and the developer to carefully review the terms of the JDA and seek professional advice to understand the GST implications and ensure compliance with the GST law.

Recent Order of Tribunal on JDA:

The National Anti-Profiteering Authority (NAA) had issued an order on Joint Development Agreements (JDA) in August 2021.

According to the order, the NAA held that any excess amount collected by the developer from the landowner, over and above the sale price of the developed property, is considered as profiteering under the GST law. In other words, if the developer recovers any additional amount as a result of the JDA, it must be passed on to the homebuyers by way of reduced prices.

The NAA order also stated that the developer must calculate the GST liability based on the consideration received from the homebuyer and not on the entire value of the developed property, which includes the share received by the landowner.

The order has significant implications for developers and landowners who have entered into JDAs. They must ensure that the terms of the agreement are clear, and any excess amount collected by the developer is correctly accounted for and passed on to the homebuyers.

It's essential to keep track of any recent updates or orders related to JDAs to ensure compliance with the GST law and avoid any legal or financial consequences.


Refund of GST Paid by Unregistered Person on Purchase of Flat/Units
Pradhan Mantri Suraksha Bima Yojana (PMSBY)
Proper officer for various provisions under Kerala State GST Act, 2017