As per the new GST laws applicable in India, any construction activity that is carried out for a landlord under a Joint Development Agreement (JDA) is considered as a service provided to the landlord and is, therefore, taxable under GST. This means that if you are a landlord who has entered into a JDA with a developer for the construction of a building on your land, you will be liable to pay GST on the value of the services rendered by the developer.
The GST rate applicable on construction done under a JDA for landlords is 18%. The developer who is carrying out the construction activity will have to charge you the applicable GST rate on the services rendered and remit the same to the government on your behalf. This means that as a landlord, you need to factor in the GST component when negotiating the terms of the JDA with the developer.
It is important to note that the GST liability on construction under JDA only arises when the developer is providing services to the landlord and not when the landlord is providing services to the developer. If the landlord is contributing towards the construction cost by way of land or any other means, and the developer is paying him/her a consideration for the same, it will not be treated as a service provided by the landlord to the developer and, hence, will not attract GST.
The GST liability on construction under JDA also depends on the stage of completion of the construction activity. If the developer is providing services to the landlord in the pre-construction stage, i.e., before obtaining the completion certificate, the GST liability will be on the actual value of the services rendered. However, if the developer is providing services post-completion, the GST liability will be on the value of the construction activity as per the completion certificate issued by the competent authority.
In conclusion, if you are a landlord who has entered into a JDA for the construction of a building on your land, it is important to understand the GST liability on such construction activity. It is advisable to consult a tax expert or a legal professional to understand the implications of GST on your JDA and to ensure compliance with the applicable GST laws.