The Nagpur bench of the Bombay high court has held that Goods and Services Tax (GST) is not applicable to the transfer of development rights (TDR) or floor space index (FSI) as part of a development agreement.
The contentious issue of tax on transfer of development rights has resurfaced as GST authorities are asking landowners to pay taxes on transferring these rights to real estate developers through joint development agreements between realty developers and landowners.
The Hon’ble Supreme Court heard and issued notice wherein the Hon’ble Telangana High Court in the case of Prahitha Construction held that, the transfer of the development rights to real estate developers by way of Joint Development Agreement with the land owners, would fall within the purview of taxable service under GST.
The issue relates to the levy of 18% GST on the value of development rights that will make various projects across key markets including Mumbai, Pune, Bengaluru, Hyderabad, and Kolkata unfeasible for all stakeholders including landowners.
The Hon’ble Telangana High Court in the case of M/s. Prahitha Constructions Private Limited v. Union of India and Ors.…
