GST changes face strong reaction from landowners, developers

Updated: Oct 23rd, 2024


The Goods and Services Tax (GST) Council is facing backlash from landowners and developers over new recommendations that will deny input tax credits on the 18% GST charged for Joint Development Agreements (JDAs). 

According to the Group of Ministers, input tax credits accumulated since April 2019 will not be refunded, and they are not in favour of providing relief to builders in this matter. A final report on these recommendations is expected to be presented on October 25.

On October 24, a decision regarding the new arrangements and JDAs will be made.

Landowners and developers are opposing the GST imposed under these agreements, insisting they should be eligible for input tax credits on the GST they pay. Currently, GST is being charged without input tax credit eligibility for both affordable and non-affordable housing.

Under JDAs, landowners transfer control of their land to developers, who then collaborate to develop properties. Developers are responsible for marketing and sales, while profits are shared after covering all project expenses. 

The tax structure allows for reduced GST rates –1.5% for affordable housing and 7.5% for other schemes – effective from April 1, 2019. However, developers cannot claim any input tax credits under this framework now, which is causing project costs to rise.

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