We are aware that the taxability of Transferable Development Rights (for brevity ‘TDR’) has undergone a significant change with effective from 01st April 2019. The liability was shifted on the developer subject to certain conditions. The reasoning of such a shift to developer only if has unsold flats as on the date of completion certificate appears to be inspired from the Honourable Hyderabad Tribunal in the matter of Vasantha Green Projects[1].
With the shift of burden of the taxability of TDRs on the developers, has provided a great relief to the land owners. Unless the land owner intends to sell his share prior to completion certificate, there is no requirement for him to obtain the registration under GST laws. As discussed in our previous articles, the land owner is only obliged to pay tax on two transactions. One, being the transfer of development rights to the developer and two, being the sale of flats falling his share to the customer prior to the completion certificate. Since, the taxation on transfer of development rights has been shifted to the developer, he is relieved from the burden of registration qua such transaction. The other transaction which compels his to obtain registration is sale of flats falling to his share prior to completion certificate. If the land owner retains or sells them post completion certificate, then there is no obligation to register under GST laws.
Read more: GST On TDRs for Commercial Projects – Also under Reverse Charge?