Builder now demands that 5% VAT is payable on agreement
Q: I have booked a under construction flat in central suburbs in Mumbai and registered the agreement. The builder has now demanded that 5% VAT is payable on agreement value or market value, whichever is higher on agreements registered between 20th June 2006 and 31st March, 2010.
Can any one throw some light and authenticate whether this is really payable. What about agreements registered subsequent to 1st April 2010, is VAT chargeable.
Regards, James G
Yes, you have to pay the VAT & Service Tax as requested by the developer. This amount is to be deposited by developer with the govt. hence it's mandatory for all buyers to pay.
VAT and Service tax of the agreement value are paid by builders. So, you would not have to go through the hassle of paying it. It would be uninformed to assume that the builder would absorb this burden and pay the tax.