1% VAT taxation in Maharashtra for Flats Registered
The Maharashtra goverment has come up with the new 1% VAT taxation for all the Flats Registration done on or after 1st April 2010. My query is before 1st April 2010, did the taxes for the sale of the Flats were borne by the builder? If yes what was the tax percentage? and also why the 1% VAT tax has now to be borne by the buyer? I am asking this question, because recently i did my flat registration and the builder has asked for the 1% VAT check in the name of the builder. Also my registration was supposed to happen on 26th March 2010, but the builder delayed it intentionally and pushed it to 9th April 2010. My query is by postponing my flat registration, does the builder gain in any way? for i know i am at loss as i have to now pay extra 1% VAT on the sale agreement amount.
Also can you please confirm if the VAT was applicable to builder earlier for building a township. For the builder never discussed about the VAT earlier during the negotiations, which means it was either included in the cost of the flat, or it was exempt for townships.
Your prompt response would be greatley appreciated.
Nidhi : The builder is fooling around. The builder never paid any VAT or any other charges previously, every charges / taxes the buyer has to pay. First of all, there is no question of signing any cheque in the name of the builder. If at all you have to pay VAT, it will be directly paid to the government (like stamp duty, etc.) and not to the builder. Will search on this and get back to you.
There was no VAT earlier on the builders. From 1st Apr 10, VAT is charged 1% of sale value. However, this amount has to be paid by the builder to the govt & not you. However, the builder will most likely take this VAT money from you & then forward it to the state govt. The govt is bothered only in getting money from RE sector & they are least bothered whether the builders pay this from their own pocket or it comes indirectly from the buyer. Anyways, it is good that the govt has finally started to tax the RE sector as it used to earn a lot but used to pay nothing back to the govt. This way, the govt will now have a cut in their earnings as well
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Thanks Real Acres for the prompt reply.
Can you please tell me if in the negotiations earlier if it was not mentioned about the VAT tax, do i still need to borne the VAT tax from my pocket? Also as the builder purposely delayed the registration in my case to April Month, can i ask him to pay the 1% VAT from his pocket? Also how much percentage of tax the builder had to pay if my registration has taken place in the month of march from his pocket?
Thanks Real Acres for the prompt reply.
Can you please tell me if in the negotiations earlier if it was not mentioned about the VAT tax, do i still need to borne the VAT tax from my pocket?
In most agreements it is clearly mentioned that the builder reserves the right ot increase the price on account of increase in taxes, input costs etc. Hence, there is nothing much you can do about this clause.
Also as the builder purposely delayed the registration in my case to April Month, can i ask him to pay the 1% VAT from his pocket?
Sure, you can definately as him to do that.
Also how much percentage of tax the builder had to pay if my registration has taken place in the month of march from his pocket?
If the reg has been done in Mar, then not a single dime needs to be paid as the tax is effective from 1 Apr 10.
*PS:- The taxes has to be borne by the builder, but they keep passing it to the buyers as they want to maintain high profit margins.
Thanks Real Acres. Also i was browsing through some legal sites and came to know that before March, builder had to pay the Tax from his pocket, which has now been shifted to buyers pocket in April. Is it true? What i want to understand is how much percentage of tax builders were paying before April?