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CAs cant decipher VAT, how can you?
September, 19th 2012

Still havent understood how to calculate the value added tax (VAT) on your house? You arent alone. Known for their expertise in number crunching and tax counting, chartered accountants too havent been able to understand VAT calculation.

The Bombay Chartered Accountants Society recently wrote to deputy chief minister and finance minister Ajit Pawar saying it doesnt understand the formula given to calculate VAT. It is very complex; we have urged him to simplify it. There is no straight method to determine this tax liability, CAs wrote.

The society said the VAT calculation for those who bought flats between 2006 and 2010 will create problems and litigations. The government should design a scheme that will help developers and buyers discharge their tax liability in a hassle-free manner. It has worked out 1% VAT of the total agreement value formula for post-2010 buyers. A similar formula should be worked out and applied to those who bought between 2006 and 2010, the letter read.

The society also said that developers should pay state the same VAT amount they charge buyers, not less.

Shailesh Puranik, MD, Puranik Developers, said there are many anomalies in the VAT calculation. Government should bring more clarity on it. For post-2010 buyers the VAT is 1%. But for 2006-2010 buyers, no one knows how much VAT needs to be paid. If CAs dont understand, how will developers and buyers? he asked.

He admitted that 2006-2010 buyers dont need to pay 5%. Developers who paid state excess taxes can get a rebate. And they can pass this benefit on to the buyers by lowering VAT percentage. But many lost receipts/documents of the purchased items, Puranik added.

A sales tax department official said the matter should be addressed at a senior level.

 
 
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