[Opinion] Income-tax Implications and Accounting in the Real Estate Sector – Demystifying JDAs & Other Construction Contracts
- News|Blog|Income Tax|
- 2 Min Read
- By Taxmann
- |
- Last Updated on 15 December, 2023
Latest from Taxmann
Navneet Singal – [2023] 157 taxmann.com 255 (Article)
Introduction
“Buying real estate is not only the best way, the quickest way, the safest way, but the only way to become wealthy”.
This quote by renowned American businessman Mr. Marshall Field emphasizes the importance of the real estate sector. The real estate industry in India’s economy currently provides about 6-8 percent of the country’s GDP, and by 2025, it is projected to contribute roughly 13 percent. The Indian real estate market is predicted to reach $1 trillion by 2030, ranking third in the world. Now, it is the third largest employer in the nation, behind manufacturing and agriculture, with over 50 million workers.
The real estate sector is evolving, encompassing expansion in the commercial and residential domains. Real estate projects could take the form of group housing societies, commercial complexes, residential townships, or industrial townships. Large sums of money and long-term agreements between developers, landowners, and eventual purchasers are involved in these projects. It has been challenging to comprehend the numerous transaction types, the year and form of income recognition, and to levy taxes on them due to the unique characteristics of these projects.
The author of this article has attempted to shed light on the nature of Joint Development Agreements (JDAs) and other construction contracts in the real estate sector, given a lengthy history of litigation. He has attempted to analyse the income-tax implications on the real estate sector under the following heads:
I. Joint Development Agreements (JDAs) and other Construction Contracts
II. Landowner – Income-tax implication
(a) Amount of consideration received and year of taxability
(b) Implication, if the JDA is not registered
(c) Exemption available to the Landowner on sale of property
(d) TDS Provisions
III. Builder or Developer – Accounting and Taxability
(a) Selection of Accounting method (Completed Contract Method (CCM) vs. Percentage of Completion Method (POCM))
(b) Applicability of guidelines and accounting standard in different scenarios
(1) Sale of constructed property
(2) Sale of under constructed property
(3) Taxability of unsold flats
(c) Deduction to Builder/Developers for affordable housing u/s 80-IBA
IV. Conclusion
Click Here To Read The Full Article
Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.
Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.
The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:
- The statutory material is obtained only from the authorized and reliable sources
- All the latest developments in the judicial and legislative fields are covered
- Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
- Every content published by Taxmann is complete, accurate and lucid
- All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
- The golden rules of grammar, style and consistency are thoroughly followed
- Font and size that’s easy to read and remain consistent across all imprint and digital publications are applied
Sign Up
To subscribe to our weekly newsletter please log in/register on Taxmann.com
Latest Books
Everything on Tax and Corporate Laws of India
To subscribe to our weekly newsletter please log in/register on Taxmann.com
