Confused over the new Value Added Tax (VAT) circular, many developers are going slow over the recovery of the tax.
According to a circular issued by the sales tax department on August 6, 5% VAT has to be paid for all properties sold between June 20, 2006 and March 30, 2010. While the liability is on the developer, they could collect the amount from the buyers, if their agreement states such a clause.
While builders and housing activists believe that the 5% VAT would now scale down further given the Supreme Court relief, many are still not able to arrive at the exact percentage that will be charged.
They now plan to approach deputy chief minister Ajit Pawar, who also handles the finance ministry, with their issues.
According to the Maharashtra Chambers of Housing Industry (MCHI), there is still no clarity on the issue.
“Initially, we arrived at the figure of 0.5 to 3%, but yesterday someone said it could reduce further to 0.3%. We will meet Pawar and ask him to give us a solution,” said Paras Gundecha, president, MCHI.
“We have asked the builders to wait before collecting money from the buyers,” he added.
Housing activists have blamed the builders for the confusion.
“The builders are misguiding the buyers and are liable to pay irrespective of whether they recover it later or not,” said advocate Vinod Sampat, who also heads the NGO, Cooperative societies Residents Users Association. The builders had earlier approached the high court against the imposition of the tax. Three months ago, the court rejected their plea.
Consequently, the sales tax department issued a circular, in August, demanding both the tax as well as the penalty.
The Supreme Court however gave relief last month by waiving off the penalty, provided the builders pay before October 31.