By Sunil Gabhawalla | Rishabh Singhvi | Parth Shah, Chartered Accountants
INTRODUCTION
The landscape of real estate development in India has progressively evolved, with Joint Development Agreements (JDAs) becoming a pervasive model for undertaking projects. This arrangement, wherein landowners and developers collaborate to bring a real estate project to fruition, presents a complex interplay of legal and tax considerations under the Goods and Services Tax (GST) regime. The topic was covered in detail in October 2023 Issue. Subsequent developments have prompted a revisit to the said article, specifically in the context of development rights purported to be granted by the landowner to the developer.
QUICK RECAP OF THE TYPICAL FACT MATRIX
In the October 2023 issue, we had elaborated that the economic substance of a Joint Development Agreement (JDA) typically involves a landowner contributing land and a developer undertaking the construction of a real estate project on that land. This collaborative model is legally executed through a series of inter-connected documents, the first document being the JDA itself. Through the JDA, development rights are granted by the landowner to the developer. Along with the JDA or immediately thereafter, an irrevocable power of attorney (POA) is also executed in favour of the developer. Numerous clauses in the JDA and POA permit the developer to obtain vacant possession of the land
