Question5: How are Collaboration agreements treated under GST'

A is a builder who takes B`s land and makes 3 floors. B gives 1 floor to A as consideration. What will be:

a. Liability on A for building this property'

b. Liability on B for giving 1 floor to A'

c. Who shall avail input of constructions'

d. Can Builder A save tax on this by not taking any advance before CC & giving occupancy to B immediately'

Answer In case of collaboration arrangement there may be many problem which can be arised in practical. This is not a case where an opinion in general can be framed following are some illustration which may change the taxability of the transaction

Section 15 may be invoked to arrive at valuation and the value of land will be included in the value

There may be any clause in the agreement giving right to the owner of the land to take possession of the property if the transaction is not completed in given time frame

There may be clause in the agreement which may permit the owner to partial use certain facility in the property before or during the completion

There may be certain privileged rights given to the land owner which may prove that the possession was available before the completion

So we don't suggest you to make general opinion without reading complete agreement with municipal by laws applicable to that land There is possibility that if you are going through the by laws of the municipal corporation or state development authority then the application is changed For example property given to widows during partition of India in some state is not transferable .(REPLY dt. 3/2/2018)