The Maharashtra Chamber of Housing Industry (MCHI)-Credai has set up a four-member committee to look for the best option for developers to compute Value Added Tax (VAT) and, in turn, pass it on to buyers who purchased flats between 2006 and 2010.

The option will be drawn up after the committee gets clarity from the state on points like deductions on marketing fee, interest cost, etc.

Ashok Mohanani, chairman and managing director of Ekta World and a member of the committee, said, "Once there's clarity, we will formulate the best option after talking to tax consultants and communicate that to developers." The three other members are Nayan Shah, chairman of Mayfair Group, Vimal Shah, managing director of Hubtown, and Vilas Kothari, proprietor of Neev Group.

At the annual general body meeting of the organization on Tuesday, confusion had arisen among developers over varied VAT calculations. "Though I understand that VAT is to be levied on the material cost, I am now confused with talk of levy on bank interests," a suburban developer said. "We just hope the state clears the confusion in the next few days and introduces a uniform tax structure," said Boman Irani, MCHI-Credai secretary.

Housing activists, however, said flat buyers should not be worried as the VAT amount will not run into lakhs. Advocate Anand Patwardhan, former chairperson of the Consumer Guidance Society of India, said the VAT amount is calculated either on the total cost of the construction material or the agreement value of the flat, whichever is lowest. He added that developers are wrong in charging VAT on the total agreement value of the flat.