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Maharashtra government to recover VAT from flat owners

Comments(8) Sub Category:Property Tax,Pune,Realty News Posted On: Aug 16, 2012

Over four lakh flat owners in Maharashtra, who had bought properties between June 20, 2006 and March 31, 2010, may have to pay Value Added Tax (VAT) to the state government.

As the state government plans to recover VAT, a trade circular is issued by the Maharashtra sales tax commissioner on August 6. The tax will be collected from the developers and builders, who would seek the money from the flat owners.

Developers’ associations in the state including Confederation of Real Estate Developers Association of India (CREDAI) plans to file a plea in the Supreme Court seeking a temporary stay on the collection of VAT till the apex court decides on it.

According to estimates, there could be over 1.6 lakh flat owners in Pune itself who bought properties between June 2006 and March 2010 and if the clause about payment of VAT has been mentioned in the agreement between the flat owners and the builder/developer, then the flat owners may have to pay.

To read more real estate news:

CREDAI opposes government’s imposition of VAT

8 Responses to “Maharashtra government to recover VAT from flat owners”

  1. e-ticaret says:

    Great site. Lots of useful info here. I am sending it to some friends ans also sharing in delicious. And obviously, thanks to your sweat!

  2. ameet says:

    Practically speaking plenty of people are in No Position to Pay @ 5% or else will spoil theirs lives by cursing present govt’s greed.

    Govr will be loser for a large no of votes due to retrospective effect with 5% VAT to be recovered in nexus with builders( Builders will play safe by any means?????)

    Govt must act fast to have property reforms with an affordable 1% VAT payable to avoid common man suffer due to nexus of Govt & Builders.


  3. Vikash says:

    I appeal, do not pay this tax……

  4. Mahesh says:

    So weather flat owners pay this vat or not? I think all govt. dept. have gone mad? They are collecting money from COMMON MAN’s pocket like Britishers, Sultans did. Common man is not united and he can not fight separately. But 5 Years is the limit. I’ll show my protest in coming election. Will you?

  5. mahesh says:

    i feel it is totally unfair with the flat owners. Now a days it is more difficult to manage the household expenses and the normal cost of flat comes around 3000-3500 per sq.ft. On this if the vat is implimented how can be the flat buyers will survive. There are so many issues like home loan / interest rates changing due to market situations and so many. State government should look into it and should not impose the vat. The ministers doesn’t feel the pain for payment of vat or any expenses. The common man is dying. GOD PLEASE SAVE THIS EARTH FROM THE CORRUPT POLITICIANS…..

  6. [...] Maharashtra government to recover VAT from flat owners [...]

  7. David says:

    1. VAT on Sale of immovable property is not payable – Looking to the business model of Builders in Maharashtra, Agreements for sale entered into cannot be classifiable as Works contracts and their vivisection into Material / Labour / or even Land cannot be done. Article 366(29A)(b) only permits vivisection of Works contracts.
    2. The MCHI judgment has only upheld the constitutional validity of the provisions as they stand on the statute book – the Department has been directed to ascertain which contracts constitute works contracts and for which finding of fact is essential to be brought on record. The MCHI judgment which was by way of a writ petition cannot be construed as a Judicial precedent on facts, which can only be established in DDQ / assessment proceedings.

    3. In my view, if the Builders decide to play safe and opt for administrative relief and pay up taxes, it is upto them to take a call. However, if they play safe with Flat buyers’ money, then it would be unfair since the real question about whether tax is payable on such types of contracts has not been decided in the MCHI judgment given on writ petition and was not arising out of assessment proceedings. In fact, in view of the fact that the amendment has been held to be merely clarificatory in nature and does not add to the State’s power to tax and the limitations and restrictions on the power of the State Government to tax only works contracts continue, there is no reason that the earlier DDQs and Tribunal decisions that have been decided in the Builder’s favour would not be applicable, facts remaining the same.
    4. With the issuance of Trade Circular No. 14T of 2012 dt. 6/8/2012, the State has bared its intentions of collecting taxes in a hurried manner on transactions that are per se non-taxable without establishment of the authority of law to collect tax thereon.

    Quoted by: C.A. Prem T. Chhatpar

  8. [...] Maharashtra government to recover VAT from flat owners [...]

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