URGENT
Querist :
Anonymous
(Querist) 26 October 2010
This query is : Resolved
SIR/MADAM,
IAM ACQUIRING A FLAT IN THANE DO I NEED TO PAY 1% VAT TO BUILDER ON AGREEMENT VALUE?...
aman kumar
(Expert) 26 October 2010
The Maharashtra Government has decided to levy one per cent Value-Added Tax on property sale from April 1, 2010 in its Budget for 2010-11. All sale agreements registered on or after April 1 will attract one per cent on the contract price of flats mentioned in the agreement of sale.
For deals closed before April 1, the old method of computation at five per cent would be followed, subject to the Bombay High Court stay on collection being lifted, according to a Sales Tax officer.
The officer pointed out, this time round, the State had brought in an amendment to VAT in the Assembly and hence there could be no further dispute on the matter.
With the court stay in force, builders were depositing the VAT component in an escrow account pending the outcome of the case. Some of them were even accepting post-dated cheques and indemnity bonds for the amount from buyers.
The Maharashtra Finance Minister, Mr Sunil Tatkare, said, while announcing the State Budget on Thursday, the levy was in accordance to the Supreme Court judgment which said “VAT becomes leviable on the sale of construction material used in the construction of flats,”
Mr Pranay Vakil, Chairman, Knight Frank India, said the decision though prospective, ended an issue that was unclear till now.
Querist :
Anonymous
(Querist) 26 October 2010
Sir thank you for your reply, but one thing please make me clear that whether now will i require to pay the VAT or not its ready to occupy flat
R.Ramachandran
(Expert) 30 October 2010
There is a context in which Anonymous is raising this query.
The context is Maharashtra Govt. has issued a notification No. VAT.1510/CR-65/Taxation-1 dated 9.7.2010. (Copy attached. According to the said notification, a builder who undertakes the construction of flats, dwellings or buildings or premises and transfer them in pursuance of an agreement along-with land or interest underlying land, has the option to pay VAT under composition scheme at the rate of 1% of the value of the sale consideration as entered in the Sale Deed.
As the 1% VAT is applicable only in respect of those flats which are built as per agreement with the prospective buyers, the query of Anonymous is whether the 1% VAT is payable even in cases where the buyer is straight away buying the ready built flat (and who has not entered into any agreement to sell or where the flat was not constructed at the instance of the buyer under any agreement).
The answer is that in respect of sale of any ready built flat, only stamp duty is leviable and 1% VAT is not payable.
