Upgrad LLM

jv development agreement


we have land for 14000 sqft of area for JV venture agreement  with a developers.

Revenue sharing would be 40 %( Land owner ) and 60 % for developers, revenue would be deposited in  joint account.

As we as land owner we shall not be liable for any VAt  and services taxes and Development Charges for the said property.

Please advice on all possible tax that can be applicable as land owner. since it change of use of land.

thank you 

Amu.

 

 

 

 

 

 
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advocate

As a land owner you go to retain your share of 40% built up area for your own use, no tax implication, in case of you go to sell that built space, then service tax will applicable, the development charges and all approval cost is mostly builder has to bear. That's it.

 
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advocate

Apart from this Capital Gain will apply to you as a land owner.

 
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thank you mr ravikumar ..... please note we are not taking built space......its a JV agreement  and revenue amount would be deposited in joint account ...VAT and service tax is liabitiy of the developers for the whole project.

Incase of capital gain tax  do we need to pay in advance??

rgds

amrish 

 
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Advocate & tax Consultant

In a jv agreement, land owner and builders are treated as partners.

When Land owner transfer his property to jv as his share, it will liable for capital gain tax.

**** For calculating capital gain tax, the sale consideration is the market value of the land on the date of transfer of land into jv.

Business income of jv will be liable to tax after allowing expenses. (allowable as per IT act)

On the date of sale of the property it will liable for capital gain tax in the hands of owner(as stated above in point denoted as *****)and on the date of sale of the built proeprty or flats etc. are business income  of jv, liable to tax in the hands of jv.

 
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Advocate & tax Consultant

both business income and capital gaisn tax are liable to tax on the date of sale of the flats or built property but the valuation will change. 

for capital gain tax, consider the fair market value of the property (plot) on the date of transfer of the property to jv.

 
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Thank Mr raghavender for the input.

One more options is regards

Incase we go for space sharing then going for revenue sharing module, in that case only capital gain tax is only applicable , since we taking flats against plot ....and when we sell then only capital gain tax is only invoved.

please advice which is the better options.

thanks and regards

 

 

 
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can you please provide your number mr raghav

regards

 

amu

 
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