Tripartite agreement

In short - A tripartite agreement in real estate development involves three parties: the developer, the landowner, and the financial institution (such as an NBFC). Here's how it works and the answers to your questions:

 How Does a Tripartite Agreement Work?
A tripartite agreement is a legal document that outlines the roles and responsibilities of all three parties involved in the real estate project. It ensures that the financial institution has a clear understanding of the project's status and the developer's obligations. This agreement is crucial when the developer seeks a loan from the financial institution to fund the project.

 Loan on Mortgage of Land
The financial institution typically provides the loan based on the mortgage of the land put to development. The landowner's share or the developer's share can be used as collateral, depending on the terms agreed upon in the tripartite agreement. This ensures that the financial institution has security for the loan provided.

 Tax Implications for the Developer
The tax implications for the developer in a real estate project can be complex. Here are some key points:

- **Income Tax**: Income generated from real estate development is classified as "Income from Business and Profession." This includes profits from the sale of properties, rental income, and income from joint development agreements (JDAs).

- **Capital Gains Tax**: If the developer sells land or property held as a long-term investment, capital gains tax applies. Short-term capital gains (STCG) are taxed at regular income tax rates, while long-term capital gains (LTCG) are taxed at 20% after indexation.

- **Goods and Services Tax (GST)**: GST applies to under-construction properties sold before the issuance of a completion certificate. The rates are 5% for non-affordable housing, 1% for affordable housing projects, and 18% for commercial properties.
- **Other Taxes**: Developers may also be subject to stamp duty, registration charges, property tax, and TDS (Tax Deducted at Source) on transactions exceeding INR 50 lakhs.

Entire Process

1. **Agreement Drafting**: The tripartite agreement is drafted, outlining the roles and responsibilities of the developer, landowner, and financial institution.

2. **Loan Application**: The developer applies for a loan from the financial institution, providing necessary documents and the tripartite agreement.

3. **Approval and Disbursement**: The financial institution reviews the application and disburses the loan in tranches based on the project's progress.

4. **Project Development**: The developer uses the loan to fund the construction and development of the project.

5. **Repayment**: The loan is repaid through the sale of project units or other agreed-upon methods.

I hope this helps! If you have any more questions or need further clarification, feel free to ask.

for the refference you can opt for this site for more details -: [Tax Planning for Real Estate Developers](https://pkcindia.com/tax-planning-real-estate-developers/)

Very well explained by the experts, which I concur.

I appreciate indepth legal knowledge of the experts on the subject matter although it is not a problem / dispute for consideration and obligation on this platform.

Thanks for your valuable comments 

In the instant case owners share is given as collateral for project finance once it's repaid the developer can take over the project and taxes like  becomes applicable 

A supplement agreement to the effect is also to be executed 

Is the tripartite agreement compulsorily registerable any stamp duty applicable since land sharing is getting converted yo monetary terms I assume since it's a part performance only sale deed executed in favour of customer attracts stamp duty at a later stage 

If the supplementary agreement mentions only about the money transfer in lieu of your share in the property which is in conformity to the conditions of the principal agreement, then this supplementary agreement can be executed on an uunregistered document too.