VAT calculation not in consumers' interest, says Akhil Bhartiya Grahak Panchayat
December, 31st 2012
The Akhil Bhartiya Grahak Panchayat, a consumer organization, has reemphasized the need to charge 1% value added tax (VAT) on sale of all apartments between 2006 and 2010. The calculation method of the state government, it said, is very complicated and not in the interest of consumers.
The Akhil Bhartiya Grahak Panchayat had organized a meeting of flat owners and their associations on Sunday. Builders and developers' associations have also approached the court. They argue that VAT is charged on movable properties and flat is not a movable property.
Suryakant Pathak, executive chairman of the Panchayat, said, "The sales tax department of the state government has come up with a very complicated calculation for charging VAT. The department has failed to understand that not all flats are sold on the same day; hence the VAT on flats in a building - with same construction cost - varies depending upon the date when it was booked. It makes no sense as VAT for every flat has to be calculated as per the government prescribed calculation, and then it will be verified by the sales tax department. Does the state sales tax department have the required manpower and time to look into each and every sale registered between 2006 and 2010?" tnnPathak said the consumer forum has suggested an amnesty scheme on the lines of the one introduced by the income tax department for tax defaulters. "By doing so, new regulations will be exercised effectively without any pending works from the past. By our calculation, the minimum amount a flat-buyer will have to pay is close to 0.8% of the construction cost. In such a situation, flat owners may not hesitate to pay 1% VAT to settle the matter."
At present, there is no clarity among flat owners as well as the builders on how to calculate the VAT and whether they should collect it from flat owners or not. One positive step from the government will save the time and energy of lakhs of people, he said.