Flat buyers hoping for some relief from paying Value Added Tax (VAT) if developers were not registered with the sales tax department are in for some disappointing news. The state has allowed builders to collect the tax retrospectively.

The department clarified that the builders
could collect VAT retrospectively from 2006 onwards even if they had registered recently.

"The builders just have to give an application," said a senior sales tax officer, on condition of anonymity.

On Tuesday, the Bharatiya Janata Party (BJP) had claimed that at least 90% builders were not registered, and hence consumers were not liable to pay VAT. They appealed to flat owners who had paid the VAT to ask for registration number from the builders, failing which they should demand a refund.

In a recent circular, the sales tax department asked builders to pay 5% VAT plus penalty on all properties purchase between June 20, 2006, and March 31, 2010.

However, since then the department has clarified that it had given builders three options to compute tax depending on location and the total VAT applicable would be in the range of 0.3 to 3%.

The Supreme Court gave relief by waiving off the penalty, provided the builders pay before October 31.

However, a majority of the builders have started sending out bills charging 5% VAT without clarifying the computation method.

Maharashtra Chambers of Housing Industry (MCHI) has constituted a five-member committee to compute the percentage of VAT payable to the state.

"There is currently confusion in the computation and this committee will suggest solutions within a month," said Paras Gundecha, president, MCHI-CREDAI.