Gujarat High Court has stayed the collection of Goods and Services Tax (GST) on the sale of Transferable Development Rights (TDR) until a final verdict is delivered in the case.
A division bench of Justices Bhargav Karia and Pranav Trivedi, while hearing the matter on June 19, observed that GST may not be applicable on the sale of TDRs, as TDR is essentially a part of land rights. The court stated that since TDRs are linked to land, which is not subject to GST, their sale should not attract tax.
GST notices to builders
The State GST Department issued multiple notices to builders demanding GST on the sale of TDRs. The department said that when one builder sells TDR to another, it constitutes a taxable transaction. This was based on the view that TDRs, when sold in the open market, amount to supply of service.
However, the high court held that TDR is a land-linked entitlement, not a service, and therefore not taxable under GST. The bench explicitly directed that no GST recovery should be made on TDR transactions until the final judgment is delivered in the case.
TDRs are widely used in Gujarat’s construction sector, especially under slum redevelopment schemes and affordable housing policies. Builders are often granted additional Floor Space Index (FSI) in exchange for constructing housing under government-approved schemes.
Source from: https://english.gujaratsamachar.com/news/gujarat/gujarat-high-court-stays-gst-on-tdr-sales-gives-breather-to-realtors
