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Old August 27 2012, 03:53 PM   #91
 
 
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Default Hit by losses, civic body to assess tax on govt buildings on its own

With officer not being appointed, tax not assessed since 2005

With no assessment of tax for properties of the Central and state governments since 2005, the loss of revenue in the process has forced the Pune Municipal Corporation (PMC) to take matters in its own hands. Usually, it is the special officer appointed by the state government who assesses such properties, but now, the PMC will do the needful.

In a proposal tabled before the Legal Committee, the PMC administration said the civic body suffered losses due to the delay in assessment of government-owned properties since 2005. Till 2005, there were 276 state government and 286 Central government buildings in the civic tax ambit. However, despite new buildings being constructed after that, the same is not reflected in the figures, the proposal states.

As per the BPMC Act, appointment of a special officer other than PMC staff is done for five years. The PMC collects general tax and service charges from the government buildings.

“The PMC had sought the state government’s permission for the appointment of a retired officer of the town planning department to assess government properties in its jurisdiction for the 2005-2010 period. However, the state government has not given its nod so far,” said Hemant Nikam, PMC tax assessment and collection officer.

The PMC was to pay Rs 35,000 to the assessment officer for the job, he said. “The delay in appointment of the special officer has resulted in financial loss to the civic body. Therefore, a PMC officer should be allowed to carry out the assessment,” he added.

Meanwhile, the civic tax department has embarked on a drive to recover property tax dues, which have been rising of late. The tax department has already collected Rs 5 crore from property owners in the past few days. “Those citizens who have not paid property tax should do so immediately to avoid action,” said civic tax officials.

Tax department officials said non-payment of dues would invite penal action, which includes the property being attached. The civic tax department is planning to form as many 10 squads to recover dues. Property tax is charged on immovable or tangible real property, such as land, buildings and permanent improvements.






Hit by losses, civic body to assess tax on govt buildings on its own - Indian Express

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Old August 27 2012, 09:48 PM   #92
 
 
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Default Flat owners to take govt ‘fatwa’ head on

Pune: Over two lakh flat owners in the city who have received notices for paying Value Added Tax (VAT) seem to be in no mood to pay the tax. Builders and developers, too, are busy calculating the amount of VAT they are supposed to pay, but are not inclined to part with a paisa even as the deadline of August 31 set by the state government is fast approaching.

The Sales Tax Department has served notices on builders and developers to pay VAT from June 2006 to March 2010. Builders, in turn, have issued notices to flat buyers, asking them to pay the tax amount. However, those heading the flat owners’ movement argue that the flat purchasers are entitled to pay only a minimum amount.

Calling the government “fatwa” as untenable, Sudhakar Velenkar, founder-president of Grahak Hitvardhini, said flat owners should refuse to pay the tax. “The flat owners who have received notices should write back to the builders, saying they refuse to pay it. They should state that we will pay only as per the law, which actually says VAT is not applicable on immovable property,” said Velenkar.

He said the flat owners should tell developers that they will pay the tax only as stated in Section 42 (3) and Rule 68 of the Maharashtra Valued Added Tax Act, 2002. “They can pay minimum amount of VAT, which could be from 0.29 to 0.5 per cent of the sale price of the flat. This amount should be paid under protest as the matter is pending in the Supreme Court,” he said, cautioning that any “unreasonable” amount, if paid, to the builder would become irrecoverable.

Velenkar said they were preparing a draft of the responses to the notices to flat purchasers. “If flat purchasers approach us, we will help them by drafting appropriate responses to the builders’ notices,” Velenkar said.

Activists of the Grahak Hitvardhini said they were building up the movement against VAT, but needed support from the flat owners. “We have received some responses from the citizens but we need more. We are preparing a list of aggrieved flat owners to take our battle to the appropriate forums,” Velenkar said. The Grahak Hitvardhini has decided to approach the Bombay High Court with a public interest litigation in the third week of September. “Ideally, we would like to approach the state government, but it may not entertain our plea,” Velenkar said.

What has put flat owners in quandary is the “unreasonable” demand being made by builders. “Though consumers do not have to pay VAT on ready-possession flats, the builders are demanding so. We have received some complaints from consumers on this count as well. Also, builders are refusing to hand over possession of the flats unless VAT is paid, which is wrong,” said Velenkar. The Grahak Hitvardhini said flat owners should pay VAT only for under-construction flats and not on ready-possession or resale flats.

The builders’ community seems to be confused itself. “We have issued notices to flat purchases to pay 5 per cent VAT of agreement value of the flat, “ said Atul Goel, CMD of Goel Ganga group. He said the builders are still calculating the amount to be paid in percentages to the sales tax department. “Our chartered accountants are working on this aspect.” Stating that the scenario is confusing, Goel said they were waiting for the Supreme Court decision, which will come on August 28. “Only then will we be able to decide on the future course of action,” he said.

Calling the retrospective tax as illegal, Goel said the government has given them three formulae to calculate VAT. “But we are working on a fourth forumla,” he said.






Flat owners to take govt ‘fatwa’ head on
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Old August 27 2012, 11:58 PM   #93
 
 
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Default Maharashtra builders to pass on VAT to buyers

MUMBAI: Builders and developers in Maharashtra today said that they would pass on the liability of paying value added tax(VAT) imposed by the state government with retrospective effect, to the respective buyers.

"The VAT will finally have to be borne by the customers... along with expenses of registration and stamp duty," industry body CREDAI's secretary and chairman of Amit Enterprises, Kishor Pate, said.

The government intends to levy a VAT of 5 per cent on constructions made between 2006 and 2010, which is resulting in an additional tax liability on flats, shops and bungalows sold by developers between June 20, 2006, and March 31, 2010.

CREDAI and other bodies had moved the Bombay High Court seeking relief in the matter but their plea was dismissed. The case is now pending in the Supreme Court.

"Earlier, VAT was proposed to be at 5 per cent but was lowered to 1 per cent, and has now been fixed at 5 per cent after all. This will have an obvious negative effect on buyers, because developers are bound to pass the added cost on to them," consultancy firm Jones Lang LaSalle head for strategic consulting Subhankar Mitra said in a statement.









Maharashtra builders to pass on VAT to buyers - The Economic Times
 
Old August 28 2012, 08:32 AM   #94
 
 
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Default Builders' body threatens to stop work

PUNE: The Builders' Association of India (BAI), Maharashtra branch, has threatened to stop construction work in the state from September 1 if the state government does not withdraw its decision to levy 5% value added tax (VAT) on constructions completed between June 2006 and March 2010.

BAI state branch chairman Manoj Potekar said on Monday that the Maharashtra sales tax deparment's order directing developers and builders to deposit the VAT on flats sold between June 2006 and March 2010

before August 31 is unjust and impractical. "The total amount which the developers will have to deposit, along with interest and penalty, will run into crores of rupees. It will be cumbersome to recover this amount from customers who have now settled into their dwellings," Potekar said.

He said it is a serious misconception that developers have recovered, but not deposited with the state, the VAT which the state is now demanding. "As the issue was sub-judice we have not recovered the tax. We have instead obtained undertakings from customers that they will pay up if the court verdict validates the state's decision to charge 5% VAT on constructions between 2006 and 2010," he said.

Potekar said the state government should completely abolish the 5% VAT implementation order or charge 1% VAT, as home buyers are being charged from April 1, 2010. Looking at the mammoth task of recovering the VAT from customers, the government should consider an amnesty scheme involving a one-time nominal payment, he said.

Meanwhile, the hearing on the special leave petition filed on the issue by Credai, an apex body of developers, in the Supreme Court on Tuesday is eagerly awaited by builders and flat buyers.






Builders' body threatens to stop work - The Times of India
 
Old August 28 2012, 04:03 PM   #95
 
 
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Default Property VAT: Aam admi caught in the midst of builder-govt tussle

Buyers who bought under-construction flats between 20 June 2006, and 31 March 2010 in Maharashtra are now being forced to shell out additional cash as developers attempt to pass on the burden of Value Added Tax which they will have to pay with retrospective effect.

The Sales Tax Department has served notices on builders and developers to pay VAT from June 2006 to March 2010 after the Bombay High court shot down real estate developers’ appeal against the tax.

Builders, in turn, have issued notices to flat buyers, asking them to pay the tax amount even though the department has clearly stated that the onus to pay the tax liability is on the developer and not the property buyer.

Flat owners pay the price

The government decision, which may hit property owners and the realty industry hard, will help mop up Rs 800 crore. But the burden would be passed on to the consumers who will be required to shell out five percent of the value of the property bought during that period.

Flat owners are furious, lamenting that they were not informed by the builders that they were required to pay VAT when they purchased their properties between 2006 and 2008. Reuters
Even though the fight is between the government and the developers, it is the end user who is suffering as the developers are creating a perception that the buyer has to pay the tax by saying it will add burden. The builders association in Maharashtra, Credai, has claimed that each flat buyer in Maharashtra would have to pay up-to five percent additional tax.

For instance, a buyer who paid Rs1 crore for a flat or shop or bungalow anywhere in the state will be liable to shell out Rs 500,000.

Flat owners are furious, lamenting that they were not informed by the builders that they were required to pay VAT when they purchased their properties between 2006 and 2008. Rahil Biliker, who bought his flat in 2006 in Pune has already received a call from his builder to pay Rs 8.5 lakh as interest and liability. At the time of purchase, the developer did not inform him that he is liable to pay VAT if he purchased the flat post-2006.

“In India realty is not organised. Neither is it regulated by any constitutional body. Every state comes out with different rule position for a specific period and its not transparent. The clauses are so confusing thereby enabling the builders to fleece innocent customers,” complains another Juhu-based flat owner, who bought three properties in Khar-Danda district between 2006 and 2009.

According to Dilip Shah, Senior Counselor and Analyst for Redevelopment of Housing Societies, the terms of agreement between the flat owner and the builder plays a key role. ” If the developer has clearly stated in the agreement that any future tax implemented by the government has to be paid by the buyer, the flat owner is liable to this entire tax. However, if the agreement does not contain the clause, the onus is solely on the builder.”

The builder cartel strangle-hold

To pass on the burden to end owners underlines the strong builder cartel in the state, which is more than evident from the astronomical property prices they charge by artificially inflating the rates despite more than 35,000 ready flats lying vacant in Mumbai.

“On the scrutiny of the books of accounts of certain developers after the passing of the judgment of the Bombay High Court, it is learnt that many developers have collected taxes from their customers but have failed to discharge their tax liability by depositing the collected tax into the Government Treasury,” the sales department said in a statement.

This comes despite the builders knowing about this tax and even after they took money from flat buyers for the same, but used the proceeds for investing, Maharashtra Finance minister and deputy chief minister Ajit Pawar had said on Sunday.

“The additional VAT will finally have to be borne by the customers. I strongly advocate the government takes a second look at this ruling and take a decision which is equitable and fair to home buyers,” said Kishor Pate, CMD – Amit Enterprises Housing Ltd & Hon. Secretary, Credai in a statement today.

Another real estate analyst, who did not want to be named, said if buyers refuse to bear this additional burden, developers will once again use their muscle power and harass buyers till they pay up. “A letter to the owner is just the beginning,” he said. He added that any such ruling which is retrospective in nature has terrible consequences not only for the industry, but especially for the end users. “This is why the government should always implement forward-looking policies rather than taxing retrospective cases to fill up its coffers,” he said.

The fineprint fight

Some builders have warned that although VAT is 5%, the effective tax works out to be 7% to 8% as it includes annual interest and penalty charges.

However, according to the department of sales tax for Government of Maharashtra website, builders’ tax liability will be adjusted against the installments paid by them so far. Although builders claim the VAT is 5 percent of the value of a flat, the sales tax department said it will work out to less than 3 percent as it has offered deductions under several heads like labour and land costs to developers. But the developers are also required to pay interest for late payment of taxes.

However, a report in the Economic Times, quoting Maharashtra’s finance minister Ajit Pawar, has said VAT will be charged only on the cost of building material and not on the cost incurred on labour, engineering, architecture and construction services. It added that the government will also provide a waiver on 15 percent interest as penalty on value-added tax (VAT) levied on property transactions between 2006 and 2010.

Before 2006, no VAT was levied on property sale. The state introduced it in 2006 after the Supreme Court passed an order in 2005, putting developers and contractors in the same bracket.

What next

Since the builder’s body has moved the SC, it is not mandatory for builders to pay the VAT till the court passes its judgement.

Challenging the constitutional validity of the government’s move to term developers as contractors and levy vat, the Maharashtra Chamber of Housing Industry (MCHI)-Confederation of Real Estate Developer’s Association of India CREDAI has gone in for a fresh round of court battle and moved the apex court. The Supreme Court will hear the case on 28 August. Credai wants the VAT to be scrapped, or at least the state to introduce an amnesty scheme which will reduce the tax load.

Says, Anirudh Wahal, Director at property consulting firm DTZ, “In real estate, like any other products all taxes are costs to seller’s business and eventually will be borne by the consumer. If the builder has not already charged the customer for VAT, he can do so now but he shouldn’t double charge him either, as that would be unfair.”

Wahal, rightly pointed out that the ruling will result in some degree of litigation.

In an attempt to fight this injustice, a consumer group called FORAM – Flat Owners’ Rights protection Action committee in Maharashtra – has been formed with consumer interest groups coming together to mobilise public opinion against the VAT on flats sold between 2006 and 2010.

Atul Puranik, convener of the new platform, told Firstpost that they have currently organised various consumer forums across Maharashtra to ensure that buyers are not forced to make any payments before the Supreme Court verdict. ” We are spreading awareness among masses and also aim to get political support for our movement,” he said.







Property VAT: Aam admi caught in the midst of builder-govt tussle | Firstpost
 
Old August 29 2012, 09:04 AM   #96
 
 
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Default Rajgurunagar airport takes off with Rs 200 cr allocation

CM’s meet clears funds; notification next month: top official

The state government on Tuesday allocated Rs 200 crore in the first phase for the proposed international airport at Rajgurunagar in Pune district, giving a push to the much delayed project.

The first phase funds are meant for acquisition of 1,800 hectares of land — 1,200 hectares for two runways, and 600 for amenities, commercial development, and to be returned to project-affected residents under the buyback policy.

The project, spread over the villages of Koye, Dhamne, Pait, Raundharwadi and Askhed Budruk, is estimated by the Maharashtra Airport Development Company (MADC) to cost Rs 1,000 crore.

Divisional Commissioner Prabhakar Deshmukh, who attended a meeting called by Chief Minister Prithviraj Chavan and his deputy Ajit Pawar in Mumbai on Tuesday, said that MADC would develop the land acquired by Maharashtra Industrial Development Corporation (MIDC).

“The technical team has visited the area and will return next week for demarcation. The notification will be issued next month,” Deshmukh said.

The meeting was also attended by Collector Vikas Deshmukh, the state revenue secretary, and managing director of MADC.

The government had zeroed in on the Rajgurunagar site some 37 km from Pune city after looking at various other options. In its proposal submitted to the government, MADC, the nodal agency to develop the airport, sought 2,700 hectares, at least Rs 1,000 crore for intial land acquisition, and Rs 40 crore to commission a techno-feasibility study of the area. The district administration initially identified 1,600 hectares to the west of the earlier proposed site at Chakan, followed by an another 200 hectares.

The proposed airport will benefit the districts of Satara, Sangli, Kolhapur, Solapur, Ahmednagar and Beed.






Rajgurunagar airport takes off with Rs 200 cr allocation - Indian Express
 
Old August 29 2012, 09:05 AM   #97
 
 
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Default SC extends VAT deadline to Oct 15, relief for developers and buyers

The Supreme Court, on Tuesday, extended the deadline for registration of VAT till October 15. The Maharashtra sales tax department, in a recent circular, had directed builders to pay 5 per cent VAT by August 31 this year along with penalty on purchase of properties between June 20, 2006 and March 31, 2010.

Maharashtra Chamber of Housing Industry -Confederation of Real Estate Developers' Associations of India (MHCI-CREDAI) and CREDAI-Pune metro had filed a special leave petition in the Supreme Court when the SC ordered to extend the deadline till October 15. The court also extended the deadline for filing returns and payment of VAT liability, without interest and penalty to the state's sales department to October 31.

While deciding the special leave petition, if the Supreme Court orders in favour of the developers, the sales department will have to return the amount collected from the former along with the interest.

Rohit Gera, vice-chairman of CREDAI - Pune and managing director of Gera Developers Private Limited said the extension of deadline is a relief for consumers as well as builders. "It was next to impossible to calculate the exact VAT liability on each unit by August 31. Since builders did not want to default, they would have inevitably charged more from consumers. With two more months in hand, builders have time to calculate the exact liability and take flat owners in confidence," he said. With August 31 as the earlier deadline, builders were in a rush to recover money from flat owners and deposit it with the government.

The Bombay HC had earlier dismissed the builder association's appeal against Maharashtra government to levy VAT on under-construction properties bought between 2006 and 2010.

Even as the deadline is extended, Pune Forum for Flat Owners has appealed builders not to recover VAT from flat owners at the rate of 5 per cent. "With the extension of the deadline, builders would now seek the amount from customers, but they should do it only at 1 per cent," said Aruna Nafday, convenor of the Forum.

The builders should also refrain from demanding interest on the amount from the customers as the court has taken care of the interest issue, she said.

The builders have created a picture that they are fighting on behalf of the customers, but they had not taken anyone into confidence while approaching the court, Nafday said. "Flat owners are arm twisted and harassed by builders for no mistake of their customers. It was the responsibility of the builder to maintain its account and charge VAT and deposit it to the state government." The flat owners should carefully read their agreements with the builder and pay the taxes if the liabilty is put on them, she added.









SC extends VAT deadline to Oct 15, relief for developers and buyers - Indian Express
 
Old August 31 2012, 09:07 AM   #98
 
 
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Default Houses close to high tension cables sent notices

PUNE: Several houses and commercial complexes in Pimpri-Chinchwad have been constructed close to high tension (HT) power supply cables.

The problem is prevalent in areas like Bijlinagar, Pimpri, Thergaon, Bhosari and closeby localities. A number of serious accidents have occurred in the past no action was taken until a 5-year-old boy suffered burn injuries near Dange chowk due to a cable wire coming in contact with an HT cable.

Reacting to it, Vasant Kachi, chief of building permission department, PCMC said, "There should be a minimum distance of 3.2 meters between any construction and the HT electricity cables. An no-objection certificate of the Maharashtra State Electricity Transmission Company Limited(Mahatransco) is needed while applying for building permission for a construction near the HT cables. We also need a no-objection certificate before giving completion certificate."

Anil Kolap, superintending engineer, Pune circle, Operations and Maintenance, Mahatransco said, "The company has sent notices to thousands of house owners for constructing houses so close to HT cables. There should be a minimum horizontal distance of 14 m from the centre of tower for any construction which is located close to the 100 KV HT cables. There should be a minimum horizontal distance of 17.5 m from the centre of tower for any construction which is located close to the 220 KV HT cables."

Kolap said the company can only issue notices and has no powers to take action. "Copies of notices have been sent to ward offices, the municipal commissioner and to the public works department engineers have the right to take action against owners of such constructions."







Houses close to high tension cables sent notices - The Times of India
 
Old August 31 2012, 09:09 AM   #99
 
 
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Default Protests over scrapping of water scarcity zone

PUNE: The state government's decision to throw open 332.62 hectares in the 23 merged villages of the Pune Municipal Corporation for full-fledged construction has not gone down well with citizens' groups and environmentalists.

They have voiced their protests at the ongoing meeting where suggestions for and objections to the changes made by the government in the draft development plan, last December, are being heard. State town planning deputy director Avinash Patil is hearing the groups.

Their primary concern is how the civic body will meet the water needs of these areas once high-rises come up when the zone was recommended because of the scarcity. Moreover, they said, the city is facing water shortage and this time, water cuts are likely to stay till the next monsoon.

The state government scrapped the water scarcity zones claiming that the situation in these localities had improved in the last few years. "The decision will have serious consequences," said urban planner Anita Gokhale Benninger. She has submitted her objection to the scrapping of the zone.

Patil said that he plans to visit the sites. "I will verify the ground situation and make a presentation to the state government," he added`.







Protests over scrapping of water scarcity zone - The Times of India
 
Old August 31 2012, 04:51 PM   #100
 
 
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Default VAT on flat is double taxation, says Consumer ‘FORAM’

For flat owners in Maharashtra, the VAT battle is not yet over! VAT on flats, or material used on construction, amounts to double taxation since the developer has already paid while buying them from registered suppliers, said Atul Puranik, convener of newly started consumer group FORAM – Flat Owners’ Rights protection Action committee of Maharashtra.
FORAM sought legal opinion from noted advocate and tax law consultant Anand Patwardhan who opined that the entire scheme of VAT on flats, shops and bungalows should be challenged. Developers, while fixing the price of the properties, would have factored all their expenses, including the costs of the land and material and taxes that they pay.
“Patwardhan’s view is: In such a situation, why should the government charge VAT again on developers who ultimately pass it on to the consumer like it happens in any transaction,” Puranik said.
Hence, it is wrong to expect developers to pay VT from their pocket since they too will pass it on to buyers, Puranik said and pointed out: “The Sales Tax department is giving conflicting and confusing statements on liability for flat buyers.
Patwardhan opined: “To the best of my knowledge, VAT will be applicable on sale/resale of goods under the sale of goods act. Builders will have to declare and explain the cost of material that has been used before working out any formula of collection of VAT from buyers.”
Referring to the latest set of FAQs issued by the Sales Tax department on the VAT issue, Mr. Puranik said the points are very confusing. “At one stage the department says the onus is on developers and somewhere else it says developer has to collect from the buyer,” he said.
For instance question number 17 and the answer are:
“Question: The builders receive non-refundable deposits and other charges under the agreement such as electricity deposit, water charges, legal charges, development charges etc. Whether such receipts will also form part of sale price for VAT?
Ans: The amounts which are received as deposits will be a deduction to the extent such amounts are actually paid to other authorities”
This is a clear indication that the consumer will have to shell out the tax, Puranik said.
He said, similarly, to Question number 19 in the FAQ list 19 on whether the VAT applicable can be collected by raising a debit note or the same should be mentioned in the agreement itself, the answer very clearly is: “Yes. It can be collected by raising a debit note. Specific mention in the agreement is a choice of the contracting parties. It will be payable on the installments received.”
He said developers might have got a respite from the Supreme Court for depositing VAT with the government, but they have begun to send out notices to buyers citing the clauses in agreements for sale that provide for payment of any future taxes to be levied by the government or municipal bodies.
“The government must immediately make its position clear and clear the confusion,” he said and appealed to NGOs and consumer welfare organizations all over Maharashtra to join the campaign against VAT and protect ultimate buyers from the VAT burden.
The issue arose after the Sales Tax department issued a trade circular calling for payment of 5% VAT on properties sold between June 20, 2006 and March 31, 2010 following the dismissal of a developers’ plea against VAT by the High Court. Now, the Supreme Court, hearing a special leave petition by developers, gave a relief to developers to pay the tax by October 31, 2012 instead of the government deadline of August 31.







VAT on flat is double taxation, says Consumer
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