Transfer of Development Rights is taxable under GST: Haryana AAR

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Transfer of Development Rights is taxable under GST: Haryana AAR

Authority for Advance Rulings, Haryana Experion Developers (P.) Ltd., In re – [2021] 123 taxmann.com 278 (AAR – HARYANA)

 

Short overview of the Ruling : 

 

The applicant was engaged in the business of undertaking construction development projects including construction of residential apartments, commercial complexes, plotted townships, hotels etc.

 

It entered into Memorandum of Understanding with another company (RBIPL) who was engaged in the business of acquiring and developing land either itself or through contractors and developers. RBIPL acquired land and offered to grant Development Rights to the applicant.

 

The applicant filed application for advance ruling to determine taxability of transfer of development rights.

 

The Authority for Advance Ruling observed that as per Memorandum of Understanding, it was clear that the title of ownership of land vests with the owner of the land.

 

The transfer of development rights would not confer any title or ownership in the developable land upon the applicant.

 

Therefore, transfer of Development rights would not amount to sale of land under Entry No. 5 of Schedule III appended to CGST Act, 2017.

 

It was held that grant of Development Rights would be taxable under the GST Act as mere transfer of development rights would not confer any title or ownership in developable land.

 

 

 

 

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