unnikk

Do not buy flat. Raise voice against the verdict of the court.
VAT on flat must be scraped. We vote in favor of our ministers, but they act against us when they are in power!! The government try to put more burden on common people. If the government does not scrap VAT, there will be a tragedy in real estate and among the flat owners. FOLLOWING IS THE NEWS APPEARED IN MUMBAI MIRROR.


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State govt firm on levying VAT on flats

Citing Supreme Court judgement, government says tax is legal

By Ravikiran Deshmukh
Posted On Sunday, June 14, 2009 at 03:00:57 AM

A stand taken by the Democratic Front Government recently has dashed the hopes of lakhs of developers and flat buyers in the city. The state on Friday, remained firm that the current 5% value added tax (VAT) on the purchase of a new flat, still stands good.

It was in reply to a written query at the state Assembly that the government stated that the Supreme Court has ruled that VAT is applicable on all construction activities undertaken through the Works Contract Act. “Accordingly, the state amended rules of the Maharashtra VAT Act, empowering the government to levy the tax on all such flats,” stated Finance Minister, Dilip Walse Patil, in his reply.

However, the minister added, the government will not levy VAT on flats that are ready for sale. The tax is applicable only to those buildings that are under construction as the VAT is levied on the construction materials used, he explained.

Meanwhile, the government’s ruling has upset buyers as well as members of Maharashtra Chamber of Housing Industry, which had approached the HC in the matter. The case is pending in HC.

MCHI receives relief

The only relief MCHI has received from HC is that it has asked the government to not recover the tax from its 550 members, until the matter is disposed of. The chamber had also argued that since a home is an immovable property, and not a commodity, applying VAT was wrong and impracticable. But the government has not offered them relief.

Unresolved issue...

Even after the government’s clarification, there is an issue that remains unresolved - whether the VAT is applicable if a developer undertakes construction activity, but not under the Works Contract Act. Many construction projects in Mumbai are being carried out based on agreements between landlords and developers, and not under the Works Contract Act. “We have been asking for clarity on the issue but the state has not stated anything clearly,” said a developer requesting anonymity.

kourtney

VAT tax to be paid on Flat purchase on the money given before the date of law passed?As you know government has levied VAT on the purchase of Flat. My agreement was signed on June 2005, I had taken advance disbursement of home loan and paid 95% of money in May 2006 itself. The possession of the Flat is in November 2007. In this case because I had paid the money before June 2006 (the date from which the VAT is levied) do I have to pay VAT on the entire amount or on the remaining amount related to grill, gas line, ammenities etc which is generally paid on possession. Please do answer my question urgently.
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affiliateelite

rachna_ca1

The basis for charging VAT is Agreement value. The computation for VAT for each flat will be as follows :-

Agreement Value say Rs. 50,00,000
(includes parking, amenities & all charges)
Less : Ready Reckoner rate as on 1st January
Of that year of Land say Rs. 20,00,000
(not to exceed 70% of agreement value)
Balance Rs. 30,00,000
VAT 5% Rs. 1,50,000

If your sales agreement is prior to June 2006, you are not required to pay VAT