Dedicated locality research platform
Enter your email address and you will receive
a link to reset your password
The Telangana High Court has delivered a significant ruling, dismissing a legal challenge by a real estate developer against the Goods & Services Tax (GST) imposition on the transfer of development rights within joint development agreements. This landmark decision is expected to have far-reaching implications on property markets nationwide, particularly reshaping the cost dynamics of redevelopment projects. The 18% GST levy on the value of development rights is likely to impact various projects in major markets such as Mumbai, Pune, Bengaluru, Hyderabad, and Kolkata, making them financially unviable for stakeholders, including landowners.
The issue arose following a GST notification in 2019, prompting the South India-based developer to file a writ petition in 2020. The petitioner argued that the taxation authority effectively sought to impose tax on a transaction resembling the sale of land within joint development agreements. The central question before the High Court was whether GST is applicable in joint development agreements when there is a transfer of development rights from landowners to developers, raising broader concerns about the timing of tax payments.
Abhishek A Rastogi, founder of Rastogi Chambers, who represented the petitioner, indicated that this industry issue may only find resolution before the Supreme Court, as several writ petitions on the matter are pending across various courts. The ruling underscores the contentious nature of the taxability of transactions involving the transfer of development rights, with arguments contending that such transfers are akin to land sales, exempt from GST.
Real estate developers had previously expressed concerns to the Ministry of Finance about the impact of GST on rehabilitation apartments provided free of cost to existing occupants as part of redevelopment projects. The Confederation of Real Estate Developers' Association of India (CREDAI) - MCHI wrote to Finance Minister Nirmala Sitharaman, requesting a change in the GST structure to ensure the viability of redevelopment projects in the Mumbai Metropolitan Region (MMR).
Redevelopment projects, especially those involving rehabilitation, play a pivotal role in Mumbai's property market, given the scarcity of vacant land parcels in the densely populated city. Currently, around 19,000 properties in Mumbai are awaiting redevelopment, highlighting the significance of this ruling in the broader context of real estate development across India. The potential impact on taxation and feasibility of such projects underscores the need for clarity and resolution, making this a pivotal moment in the real estate sector's regulatory landscape.
Propscience is India’s dedicated property news portal. We cover the latest events, news, trends, deals, new launches and more.
All our services and tools are completely free of cost and available 24X7!
We use cookies to give you the best possible service while using our website, please click accept and carry on browsing if you're happy with this. For more information see our Privacy Policy.
Okay, Got it!This disclaimer ("Disclaimer") is applicable to the entire Site. Upon entering the Site it is recommended that you immediately read the Terms and Conditions and Privacy Policy listed therein. Your continued usage of this Site will indicate your unconditional acceptance of the said Terms and Conditions and Privacy Policy. You hereby agree that Propscience reserves the right to modify at any time, the Terms and Conditions and Privacy Policy governing this Site without prior notification. Your usage of the Site implies that you will be bound by any such modification. You agree and acknowledge that it is your responsibility to periodically visit the Site and stay updated with the Terms and Conditions and Privacy Policy of the Website.
The information contained in this Site has been provided by Propscience for information purposes only. This information does not constitute legal, professional or commercial advice. Communication, content and material within the Site may include photographs and conceptual representations of projects under development. All computer-generated images shown on the Site are only indicative of actual designs and are sourced from third party sites.
The information on this Site may contain certain technical inaccuracies and typographical errors. Any errors or omissions brought to the attention of Propscience will be corrected as soon as possible. The content of this Site is being constantly modified to meet the terms, stipulations and recommendations of the Real Estate Regulation Act, 2016 ("RERA") and rules made thereunder and may vary from the content available as of date. All content may be updated from time to time and may at times be out of date. Propscience accepts no responsibility for keeping the information in this website up to date or any liability whatsoever for any failure to do so.
While every care has been taken to ensure that the content is useful, reliable and accurate, all content and information on the Site is provided on an "as is" and "as available" basis. Propscience does not accept any responsibility or liability with regard to the content, accuracy, legality and reliability of the information provided herein, or, for any loss or damage caused arising directly or indirectly in connection with reliance on the use of such information. No information given under this Site creates a warranty or expands the scope of any warranty that cannot be disclaimed under applicable law.
This Site provides links to other websites owned by third parties. Any reference or mention to third party websites, projects or services is for purely informational purposes only. This information does not constitute either an endorsement or a recommendation. Propscience accepts no responsibility for the content, reliability and information provided on these third-party websites. Propscience will not be held liable for any personal information of data collected by these third parties or for any virus or destructive properties that may be present on these third-party sites.
Your use of the Site is solely at your own risk. You agree and acknowledge that you are solely responsible for any action you take based upon this content and that Propscience is not liable for the same. All details regarding a project/property provided on this Site are updated on the basis of information available from the respective developers/owners/promoters. All such information will not be construed as an advertisement. To find out more about a project / development, please register/contact us to visit the site you are interested in. All decisions taken by you in this regard will be taken independently and Propscience will not be liable for any such loss in connection with the same. This Site is for guidance only. Your use of this Site - including any suggestions set out in the Site and or any use of the resources available on this Site, do not create any professional - client relationship between you and Propscience. Propscience cannot accept you as a client until certain formalities and requirements are met.
We use cookies to give you the best possible service while using our website, please accept it and continue browsing if you're happy with this. For more information see our Privacy Policy