CA Ravi R Thakker & Co. provides various finance, taxation, valuation, legal and compliance services to clients in Gujarat and Maharashtra. They analyze client needs carefully and provide customized solutions. Taxation of real estate transactions can be complex, but the introduction of GST provided more clarity on construction activities. There are various types of real estate transactions including joint ventures between landowners and developers, and different types of projects like affordable housing and residential/commercial. The document then outlines sample transaction flows under GST for different real estate project types including when the developer owns the land and when they enter a joint venture.

1. CA Ravi R Thakker & Co.

2. Who are we?
We are a team of professionals providing Finance, Taxation,
Valuation and Legal & Compliance related services in the
states of Gujarat and Maharashtra.
We advise our clients based on complete understanding of
issues and challenges that they face and the business
environment that they operate in. We provide customized
solutions based on careful & detailed analysis of customer’s
needs, culture and organizational processes/structures.
We keep our customers at the center of our business and
make it our primary goal to ensure a seamless experience
for each and every customer that does business with us
Taxation
Business
Advisory
Firm
Compliance
and Legal
Private
Equity
AuditingFinance

3. Real Estate - GST
Taxation of Real Estate industry has always been a tricky
preposition in India. With the government maintaining the
stand that transactions in land should not be held liable to
indirect tax (VAT, Service Tax, GST) and at the same time
transaction pertaining construction services provided
should be taxed.
With the onset of GST, there is a fair amount of clarity
regarding the classification of construction activities,
however, still a lot of issues need clarification owing to ever
changing transactions taking place in the real estate
industry.

4. Real Estate - Transactions
Types of Transactions in Real Estate
Industry
Landowner =
Developer
Joint Venture
Projects
Barter Transactions
(Landowner receives his
share of apartments from
the developer)
Revenue Sharing
(Landowner receives his
share of project revenue
from the developer)
Transfer of share in
land and building
jointly to the end
customer
Transfer of share in
land and under
construction building
separately
Transfer of share in
land and constructed
building separately
Different types of transactions in real
estate based on :
1) Ownership of land by developer
2) Structuring of sale agreements with end
customers

5. Transaction – Joint Venture
Type of Service Service Provider Service
Recipient
Person Liable To
pay Tax
Transfer of
development rights
Landowner Promoter (Builder) Promoter, at the time
of completion (RCM)
Transfer of
apartments to
landowner
Promoter Landowner Promoter
Transfer of
apartments to end
customer
Promoter/Landowner End Buyer Promoter/Landowner
Transfer of undivided
share of land to end
customer
Landowner (Not a
service)
End Buyer NA
With increasing prices of land, it has become an industry trend for builders to
enter into joint ventures with landowner, thereby limiting their capital investment
in the project. In these kind of transactions builder constructs apartments on
landowner’s land & in return provides landowner with certain agreed number of
apartments.
Both builder and landowner can sell their respective share of apartments to the
end customer and pay tax there on. The table below explains the transactions
involved.
What are Joint
Venture Transactions
in Real Estate?

6. Real Estate – Type of Projects
Affordable
Residential
Apartment-
ARA
Real Estate
Project -
REP
Residential
Real Estate
Project -
RREP
• Real Estate Project
o Development of a building or
o a building consisting of apartments, or
o converting an existing building or a part thereof into apartments, or
o Development of land into plots or apartment, as the case maybe
For the purpose of selling all or some of the said apartments or plots or
building, as the case maybe, and includes the common areas, the
development works, all improvements and structures thereon, and all
easement, rights and appurtenances belonging thereto.
(definition covers commercial buildings also)
• Affordable Residential Apartment (ARA)
A residential apartment in a project having carpet area not exceeding 60 sq
metres in metropolitan cities or 90 sq meters in cities or town other than
metropolitan cities and for which gross amount charged is not more than INR
45.00 lakh.
• Residential Real Estate Project (RREP)
A Real Estate Project in which the carpet area of the commercial apartments
is not more than 15% of the total carpet area of all the apartments in the REP.

7. Transaction Flow- ARA
• No GST is payable on purchase of land from
the landowner. Transactions in land are not
liable to tax as the same is covered in para 5
of Schedule III of CGST Act
Developer purchases
land from the land-
owner
• Uses input services like const. contractor,
input goods & input capital goods.
• 80% of total input goods and services
(except elec., fuel) purchased shall be
from a registered taxable person.*
Developer starts
Construction Activities
on the
purchased/owned land
• Developer needs to collect 1 % GST on
the total value of apartment from the
end customer and deposit the same with
the government in cash. No input tax
credit shall be available.
Developer sells
apartment to end
customers
Flow of Transactions when Developer owns the land in case of Affordable
Residential Apartment (Under Construction Building).
*RCM applicable
on remaining
20% purchases

8. Transaction Flow- ARA (JV)
ACTIVITY I
Landowner provides
development rights to
promoter to build
apartments
ACTIVITY II
Promoter initiates
construction activities on
the land by using input
services, input goods &
input capital goods.
ACTIVITY III
Promoter gives
landowner his share of
apartments in the
building while also
initiating selling exercise
of his own (promoter’s)
share of apartments
ACTIVITY IV
Landowner transfers
promoter’s share of land
to promoter’s end
customers at the time of
sale of the apartment.
Constitutes supply of service
from landowner to promoter.
Same shall be input service
for the promoter wherein tax
shall be payable under RCM
at the time of completion or
first occupancy.
• Promoter uses input
services/goods/capital
goods to construct the
building.
• 80% of total input
goods/capital
goods/services (excluding
activity I, elec., fuel, etc.)
shall be purchased from
registered taxable person.
• Apartments given to
landowner shall be
taxable @ 12% (if carpet
area of ARA in REP is
>50%)on which prop. ITC
shall be available.
• Apartments sold to end
customer shall be taxable
@ 1% on total value
wherein no ITC shall be
available.
Not liable to tax as activity of
transferring land is covered
under para 5 of Schedule III of
CGST Act.
Flow of Transactions when Landowner & Promoter enter into a JV in case of Affordable
Residential Apartment (Under Construction Building).

9. Transaction Flow- RREP
• No GST is payable on purchase of land from
the landowner. Transactions in land are not
liable to tax as the same is covered in para 5
of Schedule III of CGST Act
Developer purchases
land from the land-
owner
• Uses input services like const. contractor,
input goods & input capital goods.
• 80% of total input goods and services
(elec., fuel) purchased shall be from a
registered taxable person.*
Developer starts
Construction Activities
on the
purchased/owned land
• Developer needs to collect 5 % GST
(whether residential or comm.) on the
total value of apartment from the end
customer and deposit the same with the
government in cash. No input tax credit
shall be available.
Developer sells
apartment to end
customers
Flow of Transactions when Developer owns the land in case of Residential
Apartment in Residential Real Estate Project (Under Construction Building).
*RCM applicable
on remaining
20% purchases

10. Transaction Flow- RREP (JV)
ACTIVITY I
Landowner provides
development rights to
promoter to build
apartments
ACTIVITY II
Promoter initiates
construction activities on
the land by using input
services, input goods &
input capital goods.
ACTIVITY III
Promoter gives
landowner his share of
apartments in the
building while also
initiating selling exercise
of his own (promoter’s)
share of apartments
ACTIVITY IV
Landowner transfers
promoter’s share of land
to promoter’s end
customers at the time of
sale of the apartment.
Constitutes supply of service
from landowner to promoter.
Same shall be input service
for the promoter wherein tax
shall be payable in RCM at
time of completion or first
occupancy.
• Promoter uses input
services/goods/capital
goods to construct the
building.
• 80% of total input
goods/capital
goods/services (excluding
activity I, elec., fuel, etc.)
shall be purchased from
registered taxable person.
• Apartments given to
landowner shall be
taxable @ 18% on which
proportionate ITC shall
be available. (Tax payable
at the time of
completion)
• Apartments sold to end
customer shall be taxable
@ 5% on total value
wherein no ITC shall be
available.
Not liable to tax as activity of
transferring land is covered
under para 5 of Schedule III of
CGST Act.
Flow of Transactions when Landowner & Promoter enter into a JV in case of Residential Apartment in
Residential Real Estate Project (Under Construction Building).

11. Transaction Flow- REP
• No GST is payable on purchase of land from
the landowner. Transactions in land are not
liable to tax as the same is covered in para 5
of Schedule III of CGST Act
Developer purchases
land from the land-
owner
• Uses input services like const. contractor,
input goods & input capital goods.
Developer starts
Construction Activities
on the
purchased/owned land
• Developer needs to collect 12 % GST on
the total value of apartment from the
end customer and deposit the same with
the government. Proportionate input
tax credit shall be available.
Developer sells
apartment to end
customers
Flow of Transactions when Developer owns the land in case of Commercial
Apartment in REP (Under Construction Building).

12. Transaction Flow- REP (JV)
ACTIVITY I
Landowner provides
development rights to
promoter to build
apartments
ACTIVITY II
Promoter initiates
construction activities on
the land by using input
services, input goods &
input capital goods.
ACTIVITY III
Promoter gives
landowner his share of
apartments in the
building while also
initiating selling exercise
of his own (promoter’s)
share of apartments
ACTIVITY IV
Landowner transfers
promoter’s share of land
to promoter’s end
customers at the time of
sale of the apartment.
Constitutes supply of service
from landowner to promoter.
Same shall be input service
for the promoter wherein tax
shall be payable in RCM at
time of completion or first
occupancy.
• Promoter uses input
services/goods/capital
goods to construct the
building.
• Apartments given to
landowner shall be
taxable @ 18% on which
proportionate ITC shall
be available. (Tax payable
at the time of
completion)
• Apartments sold to end
customer shall be taxable
@ 12% on total value
wherein proportionate
ITC shall be available.
Not liable to tax as activity of
transferring land is covered
under para 5 of Schedule III of
CGST Act.
Flow of Transactions when Landowner & Promoter enter into a JV in case of Commercial Apartment in REP (Under Construction
Building).

13. Our Services
Services
Financial Modelling & ValuationEquity & Debt Syndication
Legal and Compliance Direct & Indirect Taxation
Secretarial Practice
Accounting & Auditing

14. Contact Us
vijita.thakker@gmail.com
+91 – 97129 66420
Vijita Thakker (LL.B, LL.M)
ca.ravithakker@gmail.com
+91 – 9879 839 799
Ravi Thakker (CA, CFA, FRM)
403, Anand Mangal -1,
Femina Town Lane,
Near Stadium Cross Roads,
C.G. Road,
Ahmedabad - 380009
403, Anand Mangal -1,
Femina Town Lane,
Near Stadium Cross Roads,
C.G. Road,
Ahmedabad - 380009

15. Thank You