Important Keyword: GST Notification 23/2019, development rights GST India, JDA GST rules, real estate GST April 2019, GST on TDR,
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[F. No. 354/136/2019- TRU]
Government of India
Ministry of Finance
(Department of Revenue)
New Delhi, the 30th September, 2019
Notification No. 23/2019 - Central Tax (Rate): Seeks to amend Notification No. 4/2018 - Central Tax (Rate), dated the 25th of January 2018, by adding an explanation on the applicability of provisions related to supply of development rights.
[TO BE PUBLISHED IN THE GAZZETE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]
G.S.R......(E).- In exercise of the powers conferred by section 148 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No.4/2018- Central Tax (Rate), dated the 25th January, 2018 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 67(E), dated the 25th January, 2018, namely:-
After paragraph, the following explanation shall be inserted, namely: - “Explanation.- Nothing contained in this notification shall apply with respect to the development rights supplied on or after 1st April, 2019.”.
2. This notification shall come into force with effect from the 1st day of October, 2019.
(Ruchi Bisht)
Under Secretary to the
Government of India
Note: - The principal notification was published in the Gazette of India, Extraordinary, vide notification No. 4/2018 - Central Tax (Rate), dated the 25th January, 2018, vide number G.S.R. 67 (E), dated the 25th January, 2018.
📚 Frequently Asked Questions (FAQs): Notification No. 23/2019 - Central Tax (Rate)
Q1: What is Notification No. 23/2019 – Central Tax (Rate)?
Answer:
Notification No. 23/2019 – Central Tax (Rate) amends Notification No. 4/2018 by inserting an explanation clarifying that GST exemption does not apply to development rights supplied on or after 1 April 2019.
Q2: From which date is Notification No. 23/2019 applicable?
Answer:
The notification comes into force from 1 October 2019, but it clarifies the tax position retrospectively from 1 April 2019 for development rights.
Q3: What are “development rights” under GST?
Answer:
Development rights refer to the right given by a landowner to a developer to construct and sell units on land, usually under a Joint Development Agreement (JDA), in exchange for:
Constructed flats, or
Revenue share, or
Combination of both
Q4: What was Notification No. 4/2018 – Central Tax (Rate) about?
Answer:
Notification No. 4/2018 provided GST exemption on certain supplies of development rights subject to conditions, mainly for affordable housing and specified projects.
Q5: What clarification does Notification No. 23/2019 provide?
Answer:
It clearly states that nothing in Notification 4/2018 applies to development rights supplied on or after 1 April 2019.
This means new GST rules introduced from 1 April 2019 will apply.
Q6: Why is 1 April 2019 important for development rights?
Answer:
From 1 April 2019, a new GST regime for real estate was introduced, including:
Special valuation rules
Time of supply linked to completion certificate
Reverse charge obligations
This notification aligns exemption provisions with the new regime.
Q7: Does this mean GST is payable on development rights after 1 April 2019?
Answer:
Yes ✅. Development rights supplied on or after 1 April 2019 are taxable under the applicable real estate GST framework, not exempt under Notification 4/2018.
Q8: How does this affect Joint Development Agreements (JDAs)?
Answer:
For JDAs signed earlier but development rights transferred on or after 1 April 2019, GST liability must be determined as per post-April-2019 real estate GST provisions, not old exemptions.
👉 JDAs need careful GST review. Consult Finodha experts:
🔗 https://finodha.in/gst-compliance/
Q9: Is GST payable immediately on transfer of development rights?
Answer:
No. Under real estate GST rules, GST on development rights is generally payable at the time of issuance of completion certificate or first occupation, whichever is earlier.
Q10: Does this notification create a new tax?
Answer:
No ❌. It does not create a new levy. It only clarifies the non-applicability of an existing exemption for a specific period.
Q11: Who is most impacted by Notification No. 23/2019?
Answer:
This notification directly affects:
Real estate developers
Landowners entering JDAs
Builders working on redevelopment projects
LLPs and companies in construction business
👉 Planning a real estate venture?
🔗 https://finodha.in/setup-business/
Q12: Is GST registration mandatory for landowners supplying development rights?
Answer:
Yes, in many cases. If a landowner supplies taxable development rights, GST registration may be required unless covered under specific exemptions.
👉 Check eligibility with Finodha GST Registration:
🔗 https://finodha.in/online-gst-registration/
Q13: How should GST on development rights be reported in returns?
Answer:
GST must be:
Paid under appropriate liability (often RCM-linked structure)
Reported in GSTR-3B
Reflected correctly in books and agreements
👉 File accurate returns with Finodha:
🔗 https://finodha.in/gst-return-filing/
Q14: What happens if GST is wrongly not paid citing old exemption?
Answer:
Incorrect exemption claims may result in:
GST demand with interest (Section 50)
Penalty under Sections 73 or 74
Litigation risk during audits
Q15: How can businesses stay compliant after Notification No. 23/2019?
Answer:
Businesses should:
Review all JDAs and redevelopment agreements
Identify date of supply of development rights
Align tax treatment with post-April-2019 GST rules
Seek expert review before project completion
👉 Get end-to-end GST support from Finodha:
🔗 https://finodha.in/gst-compliance/
Conclusion🏢:
Notification No. 23/2019 – Central Tax (Rate) removes ambiguity around GST exemption on development rights and ensures smooth transition to the new real estate GST regime effective from 1 April 2019.
📌 Key takeaway:
Old exemptions ≠ New regime. Date of supply matters.
👉 Avoid costly GST disputes. Get expert assistance from Finodha GST Professionals
🔗 https://finodha.in/gst-compliance/
Download PDF: Notification No. 23/2019 - Central Tax (Rate)
More Information: https://taxinformation.cbic.gov.in/
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