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Housing body meet fails to shed light on VAT row
September, 06th 2012

Developers sought clarity on the mechanism to levy value-added tax (VAT) on those who purchased flats between 2006 and 2010 and to refund the excess amount at the annual general body meeting of Maharashtra Chamber of Housing Industry (MCHI) that was held on Tuesday.

"I want to know whether I can compute the levy building-wise instead of individual flat agreements. It would ease my administrative load," said a leading developer, who attended the meeting. The developer along with two others has sought a meeting with the state finance minister and sales tax commissioner next week.

Some developers said they still have to sit with their accountants to decide which of the three VAT schemes (framed by the sales tax department) will be profitable to compute VAT

. "It will depend on factors like the quantum of set-offs that the authorities will give me if I have purchased lands at historic values. Will they give me a 100% set-off or deduct the land cost as per ready reckoner rates? Accordingly, I will decide whether to add 10% or 15% profit on the cost of material for computing VAT," said another leading developer.

MCHI president Paras Gundecha, "Confusion has arisen as VAT calculations are varying among developers with some charging 0.5% while others 3%. We are bound to refund the excess amount to the buyers, but we have time till October 31 to make the payment. We hope the government clears the confusion in the next few days and introduces a uniform tax structure."

The government is yet to clarify whether it would accept a certificate by an architect to prove the building is ready, said some developers. In several cases, buildings are ready but the civic body takes time to issue an occupation or a completion certificate. The sales tax department construes the building as under-construction.

Over 2,000 buildings do not have completion certificates (CC) as developers have not fulfilled some clauses when they were got construction permissions. Developers said they sold flats without the civic body's CC as it takes a lot of time. "The fee for a CC is miniscule so we do not fret if the civic body forfeits it," said a builder.

saw developers affiliated to the Maharashtra Chamber of Housing Industry (MCHI) seeking more clarity from authorities. I want to know whether it is possible to compute the levy building wise instead of individual flat agreements. It would help ease my administrative load,'' said a leading developer, who attended the Annual General Body meeting of the Maharshtra Chamber of Housing Industry. The developer along with two others has sought a meeting with the state finance minister and sales tax commissioner next week.

Some developers said they still have to sit with their accountants to decide which of the three schemes (framed by the sales tax department) will be profitable to compute VAT. The decision will depend on factors like the quantum of set off authorities will give me if I have purchased the land at historic values. Will they give me 100 per cent set off or deduct the land cost as per ready reckoner rates? Accordingly, I will decide whether to add 10 per cent or 15 per cent profit on the cost of material for computing VAT,'' said another leading developer.

Some developers said that the government have yet to clarify whether it would accept a certificate by the architect that the building is ready. According to developers, there are numerous cases wherein the building is ready but as the civic body takes time to issue occupation or the completion certificate, the sales tax department construes the building as under-construction and levies a hefty tax.

There are over 2,000 buildings which do not have completion certificate (CC) as no developer fulfills some clauses when he is granted permission to construct a building. Incidentally, developers said they usually sell flats without waiting for the civic body to grant CC. Not only they take a lot of time to grant CC, the fee we pay for granting CC is miniscule that we do not fret if the civic body forfeits it,'' said a developer.

 
 
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