The question every JDA landowner should have answered before signing
Signing a joint development agreement does not keep you in the role of landowner. Under RERA, it may make you a co-promoter — with obligations toward buyers you never sold anything to and penalties you did not personally incur. Two 2026 rulings confirm this. A third finding, from Telangana RERA, adds something that receives far less attention: co-promoter status also removes the one statutory remedy you assumed was available to you when your developer falls behind.
This applies to you if
- You are a landowner who has signed or is negotiating a joint development agreement, under which a developer constructs on your land in exchange for a share of the constructed area or project revenue.
- You want to understand what “co-promoter” means in RERA terms, and what obligations and remedies flow from that status.
- You have been told by a developer that registering as a co-promoter under RERA is an administrative formality that does not affect your liability.
- What triggers co-promoter status under RERA — and why the trigger is involvement and consideration, not bare land ownership.
- What co-promoter status costs you outward: the Karnataka HC ruling on RERA recovery against JDA landowners.
- The second edge: what co-promoter status takes away. TG RERA on why a JDA landowner cannot file a RERA complaint against their own developer.
- There is no dual status: promoter or buyer, not both — and what that leaves you holding when the developer defaults.
- The tax clauses JDA landowners miss: capital gains trigger, the Section 45(5A) / 50C position, and the GST treatment of development rights.
- GST on development rights: who actually pays it
What triggers co-promoter status under RERA
Co-promoter status under RERA is not triggered by land ownership. It is triggered by the combination of two facts: the landowner’s involvement in the development activity, and the consideration they receive being tied to the project’s output. A landowner who leases land for a fixed rent retains only the status of landowner. A landowner who contributes land for a share of constructed area or a share of project revenue has crossed into the definition. Where this sits in the wider picture of buying and holding Indian property is covered in our real estate guide for salaried buyers.
The statutory basis is Section 2(zk) of the Real Estate (Regulation and Development) Act, 2016. We set out the Karnataka High Court ruling and its reasoning in full separately. The definition of “promoter” includes “a person who constructs or causes to be constructed” a real estate project. Courts and regulators have interpreted this to capture JDA landowners whose consideration is area-share or revenue-share, because the landowner has in effect “caused to be constructed” the project on their own land by executing the development agreement.
The test that emerges from the 2026 rulings is whether the landowner’s interest in the outcome is sufficiently commercial. Bare ownership, without any participation in the economics of what is built, does not make someone a promoter. The choice between the two structures is itself a decision with consequences — see revenue share against area share in a JDA. An area-share or revenue-share arrangement, where the landowner’s receipt depends on what is sold and how much, does. Most JDAs that offer the landowner a share of constructed flats or a percentage of revenue sit on the co-promoter side of that line.
This matters because of what co-promoter status brings: registration obligations under RERA (for projects above 500 square metres or 8 units), joint liability for project delays and penalties, and — as the Karnataka HC confirmed in August 2026 — exposure to RERA recovery proceedings against the landowner’s own property.
The time to find out you are a co-promoter is before you sign, not when the auction notice arrives
We track RERA co-promoter rulings, JDA capital-gains positions and circle-rate revisions. When one of them moves, you get one email that says what it does to a landowner.
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What co-promoter status costs you: the Karnataka HC ruling
A Karnataka High Court order dated 11 August 2026 held that a JDA landowner who had permitted a developer to construct on their property was a co-promoter under RERA. When the developer went into NCLT corporate insolvency proceedings, RERA issued a recovery certificate and the Special Tahsildar issued a public auction notice against the landowners’ property. The court upheld that notice.
The case is M. Govind Reddy and another v. Venkat Estates Pvt Ltd (Karnataka HC, 11 August 2026; 2026 TAXSCAN (HC) 1332). The petitioners were JDA landowners who argued that the developer’s insolvency was not their liability. The court held otherwise: by permitting development under a JDA, they had assumed co-promoter status, and the obligations of a co-promoter to buyers and to RERA’s recovery machinery follow from that status. The court relied on the Supreme Court’s ruling in Vishal Chelani v. Debashis Nanda for the proposition that IBC and RERA occupy distinct spaces, but addressed the co-promoter status question directly. The auction notice against the landowners’ property was upheld. The full order text has not been independently retrieved; secondary sources consulted are taxscan.in, trilegal.com, and taxguru.in.
What this means in practical terms for a JDA landowner:
If your developer is delayed, penalised by RERA, or goes into insolvency, and if buyers have obtained recovery certificates against the project, those recovery proceedings can reach your land. The fact that you did not build the project, did not sell the units, and did not receive the consideration the buyers paid is not a complete answer. You are a co-promoter, and the co-promoter’s obligations include joint exposure to the recovery machinery. The standard landowner’s assumption — “the developer bears the risk, I only contributed the land” — is not supported by what this ruling says.
RERA registration as a co-promoter (required above the 500 sq m / 8 unit threshold) is itself a compliance obligation, not an administrative formality. Failure to register creates its own penalty exposure, separate from the project’s underlying delays.
The second edge: co-promoter status takes away your own RERA remedy
The outward liability edge — that a JDA landowner can be held responsible to buyers — receives coverage, even if incomplete. What receives almost no coverage is the inward edge: that co-promoter status also disqualifies you from being an allottee under RERA, which means you cannot use RERA’s fast, cheap, buyer-friendly forum against your own developer when they default on you.
The Telangana Real Estate Regulatory Authority addressed this directly in Complaint No. 579 of 2025, Dr. B. M. Naidu v. M/s ISTA Homes Builders & Developers LLP. The landowners had entered a Development Agreement-cum-General Power of Attorney in September 2022 over a 556 square yard property at Guttala Begumpet, Hyderabad. The developer built a stilt-plus-five-floor residential project. The landowners alleged project delay past the agreed October 2024 completion, non-payment of contracted monthly rental compensation from November 2024, pre-OC sale of two flats by the developer, and incomplete common amenities.
None of those allegations was examined on the merits. The Authority dismissed the complaint on maintainability, holding that the landowners who had contributed land for a share of constructed area were co-promoters under Section 2(zk), not “allottees” under Section 2(d). The rights arising from the Development Agreement are not the rights of a buyer who has purchased from a promoter. They flow from the DA itself, not from an agreement for sale. RERA’s jurisdiction does not extend to disputes between co-promoters arising under a Development Agreement. The Authority expressly left the landowners to pursue “appropriate legal remedies before the competent forum” — meaning the arbitration clause in the DA, if one existed, or a civil suit. This ruling is reported from a single secondary source (NewsMeter, 24 July 2026); the full order text has not been independently retrieved and should be confirmed against the primary record at rera.telangana.gov.in before relying on it in any legal or advisory context.
There is no dual status: promoter or buyer, not both
The logic of the ruling is internally consistent: the same fact that makes the landowner a co-promoter — receiving area-share consideration for contributing land to a project — is the fact that disqualifies them as an allottee. There is no dual status. You are either a promoter or a buyer; a JDA area-share landowner is the former, not the latter.
The practical consequence is this: when you sign a JDA and your compensation is a share of constructed flats, you are foregoing the statutory protection RERA extends to buyers. If the developer delays, stops paying contracted rent, sells units you were entitled to, or delivers incomplete amenities, your remedies are what the DA says they are — and nothing more. If the DA’s dispute resolution clause sends you to arbitration, that is the forum. If the DA has no effective enforcement mechanism for the landowner’s rights, what you have is a civil suit measured in years.
Editor’s Analysis
Most landowners never see this coming, and it is not because the risk is hidden. It is because the legal team is looking somewhere else. Due diligence on a JDA goes into title and ownership rights — that is what the lawyers are hired to secure, and they secure it well. Co-promoter status sits outside that brief and routinely goes unexamined.
The exception is when the developer asks for it directly. The moment it becomes a request rather than a consequence, the whole negotiation changes shape — and that is increasingly what I see. Developers want it now. It spreads liability, and it makes the landowner far easier to manage through the life of the project.
But the thing that decides how badly this actually hurts is the deal structure, not the ruling. In a revenue-share arrangement the landowner receives cash as sales happen, and cash is negotiating position. In an area share, the landowner holds nothing until the building exists. If the project stalls, there is no building to take back and no money to walk away with. In practice the landowner stays entirely outside the chaos until a court notice arrives — and by the time it does, the options have already gone.
Protective clauses do exist. Whether you get one depends on whether anybody was looking for it when the document was drafted. Get an advisor before you sign anything.
The tax clauses JDA landowners miss
The legal exposure is only half of what landowners miss. The tax side carries three distinct issues, and missing any one of them produces either a demand notice or a larger-than-expected bill at the exact moment the money has already moved.
Capital gains trigger and Section 45(5A). The Income-tax Act, 1961 contains a special provision for JDA landowners at Section 45(5A). Without it, capital gains from a JDA would be taxable in the year the development agreement is executed — before any flats are delivered and before any cash is received. Section 45(5A) defers this: the capital gains are taxable in the year in which the completion certificate is issued, with the fair market value of the landowner’s share of units on that date as the consideration. This provision applies where the landowner is an individual or HUF and the project is a residential one. Verify whether the IT Act 2025 provision equivalent to Section 45(5A) applies to your specific transaction with a CA — both Acts are currently in the legislative record and the applicable Act depends on when your transaction falls.
Circle rate deeming under Section 50C. If the stamp duty value (circle rate) of the land being transferred under the JDA is higher than the consideration agreed in the DA, the Income-tax Act, 1961 deems the stamp duty value to be the consideration for capital gains computation. The same deeming provision catches ordinary sellers when a state revises its circle rates — we set out how stamp duty and circle rates vary by state separately. This is Section 50C of the Income-tax Act, 1961 (Section 78 of the Income-tax Act, 2025). In areas where circle rates are significantly above transacted values, this can generate a notional capital gain on a consideration the landowner never actually received. The provision applies to land and building, and JDA agreements that understate the landowner’s consideration relative to the circle rate of the contributed land are affected.
GST on development rights: who actually pays it
GST on transfer of development rights. The transfer of development rights by a landowner to a developer under a JDA is a taxable supply under the Central Goods and Services Tax Act, 2017. GST treatment of the finished units differs again depending on completion status — see under-construction against ready-to-move. Under the reverse charge mechanism applicable from 1 April 2019, GST on the development rights is payable by the developer (not the landowner) at the time of construction. However, the landowner remains party to the transaction that is the underlying supply, and the documentation must correctly reflect the nature of the supply to avoid misclassification. The exact GST treatment depends on the structure of the JDA, the applicable notifications, and whether the project qualifies for the affordable housing rate. Verify with a CA familiar with real estate GST before finalising the DA structure.
Key Takeaways
- Co-promoter status under RERA is triggered by involvement and consideration tied to project output — area share, revenue share. Bare land ownership does not trigger it. Most JDAs that offer the landowner a share of constructed flats or a percentage of revenue cross into co-promoter territory.
- The Karnataka HC order (11 August 2026, M. Govind Reddy v. Venkat Estates) confirmed that RERA’s recovery machinery can run against a JDA landowner’s property when the developer defaults. The landowner’s argument that they did not build or sell the units was not accepted.
- The TG RERA order (Complaint No. 579 of 2025) confirmed the second edge: co-promoter status disqualifies the landowner from being an allottee under Section 2(d). A JDA landowner cannot file a RERA complaint against their own developer. Their remedies are only what the Development Agreement says they are.
- Revenue share is chosen because it is simple and efficient and easy for the landowner. What gets missed: the legal liability to third parties it creates, the RERA forum it takes away, and the tax position it establishes at three separate points (capital gains trigger, circle-rate deeming, GST on TDR).
- Section 45(5A) of the Income-tax Act, 1961 defers JDA landowners’ capital gains to the year of the completion certificate — not the year of the DA. Verify the applicable provision and Act for your transaction with a CA.
- Circle rate deeming under Section 50C, Income-tax Act, 1961 (Section 78, IT Act 2025) can produce a notional capital gain if the stamp duty value of the land exceeds the consideration stated in the DA. In high-circle-rate areas, this is a material risk.
- The most important document in a JDA, for the landowner, is the dispute-resolution clause. If it does not provide a fast, enforceable mechanism for rental compensation defaults and project delay, and if RERA is now unavailable as a backup, the landowner’s enforcement machinery is a civil suit.
Frequently Asked Questions
Does signing a JDA automatically make me a co-promoter under RERA?
Not automatically in all cases — the test depends on the structure of the DA and the consideration the landowner receives. A fixed rent with no share in the project’s output has a different RERA characterisation than a structure where the landowner receives a share of constructed area or revenue from sales. The two 2026 rulings addressed landowners who had area-share or equivalent consideration. If your DA has that structure, the co-promoter risk is real and should be assessed with a lawyer before the agreement is signed.
Can I still file a RERA complaint against my developer if I am a JDA landowner?
According to the Telangana RERA ruling (Complaint No. 579 of 2025), no — at least not as an allottee. The Authority held that a JDA landowner who receives area-share consideration is a co-promoter under Section 2(zk) and not an allottee under Section 2(d), and that disputes between co-promoters arising under a Development Agreement fall outside RERA’s jurisdiction. This means the fast, cheap RERA complaint mechanism that buyers use against developers is not available to JDA landowners in this interpretation. This is a single state authority’s order and may be appealed; it is not binding precedent across all states. Verify whether the same interpretation has been adopted in the state where your project is located.
When do I pay capital gains tax on a JDA? At the time of signing the DA or when flats are delivered?
Section 45(5A) of the Income-tax Act, 1961 defers the capital gains trigger to the year in which the competent authority issues the completion certificate for the project. Before this provision was introduced, the gains would have been taxable in the year of the DA (before any cash or flats were received). The provision applies to individuals and HUFs in residential projects. For commercial projects, or where the structure is a revenue share rather than area share, verify the applicable provisions with a CA. Also verify whether the IT Act 2025 equivalent provision applies to your transaction, since the 1961 Act was repealed from 1 April 2026.
What is the circle rate deeming rule and how does it affect JDA landowners?
Section 50C of the Income-tax Act, 1961 (Section 78 of the IT Act 2025) provides that if the consideration received or accruing from transfer of a capital asset (land or building) is less than the stamp duty value, the stamp duty value is deemed to be the full value of consideration for computing capital gains. In a JDA, the “consideration” the landowner receives is the value of the constructed area they are entitled to. If the stamp duty value of the land being contributed exceeds that consideration, the deeming provision can create a notional gain on which tax is payable. In areas with high circle rates relative to market values, this can be a material gap between the tax liability and the actual economic receipt.
Primary sources
- Real Estate (Regulation and Development) Act, 2016 — Section 2(d) (definition of “allottee”) and Section 2(zk) (definition of “promoter”). Bare text at rera.org.in and state RERA portals.
- M. Govind Reddy and another v. Venkat Estates Pvt Ltd, Karnataka High Court, 11 August 2026 (2026 TAXSCAN (HC) 1332). Secondary sources consulted: taxscan.in, trilegal.com, taxguru.in. Full order text not independently retrieved.
- Dr. B. M. Naidu v. M/s ISTA Homes Builders & Developers LLP, Complaint No. 579 of 2025, Telangana Real Estate Regulatory Authority (Members K. Srinivasa Rao and Laxmi Narayana Jannu). Secondary source: NewsMeter (Sistla Dakshina Murthy), 24 July 2026. Full order text not independently retrieved.
- Income-tax Act, 1961 — Section 45(5A) (JDA capital gains deferral), Section 50C (circle rate deeming). The Income-tax Act, 2025 supersedes the 1961 Act from 1 April 2026; verify applicable provisions for your transaction year with a CA. Section 50C (1961) = Section 78 (IT Act 2025).
- Central Goods and Services Tax Act, 2017 and applicable notifications on construction and transfer of development rights, including GST Notification No. 04/2019-CT(R) (effective 1 April 2019) on reverse charge for development rights.
Secondary sources and commentary
- TaxScan, trilegal.com, TaxGuru — Karnataka HC order coverage (secondary reports on M. Govind Reddy ruling, August 2026).
- NewsMeter (Sistla Dakshina Murthy), “Can Landowners Drag Builders to TG RERA Over Project Delays?”, 24 July 2026 — framing of TG RERA ruling (secondary; single-source; order to be verified independently).
- FinEstate practitioner analysis — Utkarsh Garg, September 2026. Editor’s Analysis block reflects first-hand experience in Indian real estate development and JDA transactions.
The Bottom Line
Revenue share is chosen because it is simple. What it is not is consequence-free. In a single JDA, a landowner acquires co-promoter obligations toward buyers they never dealt with, loses the statutory forum they assumed was their backstop against their own developer, and establishes a tax position across three separate heads — capital gains trigger, circle rate deeming, and GST — that requires professional review before the agreement is signed. The two 2026 rulings do not create new law; they confirm what was always in the statute. The landowners in both cases signed without knowing it applied to them.
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Subscribe freeThe next co-promoter ruling will come from a different state
Telangana RERA is one authority’s reading and it can be appealed. When another regulator or a High Court takes a different line on whether a JDA landowner is an allottee, we send one email.
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Disclosure and method
The specific risk on this page: a JDA landowner who assumes their RERA co-promoter registration is an administrative formality, and that their remedies against a defaulting developer include the RERA complaint forum. On the reasoning in the two rulings cited, both assumptions may be wrong. Both rulings are reported from secondary sources; the full order texts have not been read against the primary court and authority records, and the article says so where it matters. Nothing in this article is legal or tax advice; the three tax issues described (Section 45(5A) deferral, Section 50C deeming, and GST on development rights transfer) should be assessed for your specific transaction by a CA and a lawyer familiar with real estate transactions. See our full disclaimer. Drafted with AI assistance and reviewed before publication.
Keep reading
This article is part of our real estate and land guide — the full set of explainers for salaried Indians, in the order you actually meet them.