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Builder is now demanding VAT at 5%. Is it legal?
Q: My flat in Mulund was registered on 29/09/06 and handed over by the builder on 29/02/08 after payment of all dues. Society has also been formed. The builder is now demanding VAT @ 5% of total agreement value. Is it valid/legal? - MK
Reason cited by the builder is the judgement of Bombay High Court on 11 April 2012 against an appeal of a builders' association challenging inclusion of housing/real estate under the purview of VAT by Maharashtra Govt in the state budget 2006.
This was announced by court, when builders lost case at High Court. The flats registered between 20th June 2006 to March 2010 will have to pay VAT charges..
I heard that developers have to pay 1% VAT charges to govt. and that's the reason they are requesting buyers to pay. But it is not 5% I think. VAT+Service tax is 1%+2.575%.