A newly formed consumer group, Flat Owners’ Right Protection Action Committee in Maharashtra (FORAM), has appealed to flat owners not to pay the Value Added Tax (VAT) as demanded by the builders.
The state sales tax department in a recent circular had asked builders to pay 5% VAT plus penalty on purchase of properties between June 20, 2006, and March 31, 2010, by August 31 this year. The builders have started sending out bills to flat owners demanding the amount.
“VAT is being levied on materials used in housing which are already subjected to sales tax. This is nothing but double taxation. We appeal to all to ignore the demand for this tax. We are undertaking a big campaign against the move. Flat owners are finding it difficult to pay off home loans and this will only make their lives miserable,” said Atul Puranik, convener of FORAM.
The Maharashtra Chamber of Housing Industry had challenged the state’s move in 2009 but lost the case in the Bombay high court. An appeal has been filed in the Supreme Court, which will address the issue on Tuesday.
Housing society activists have urged the state to take a humanitarian view. “It is not the builders but the consumer who has to bear the burden of taxes. The best solution is to start an amnesty scheme to give relief to flat owners,” said Ramesh Prabhu, chairman, Maharashtra Societies Welfare Association (MSWA).
However, the state is not keen on giving up revenue of nearly Rs1,000 crore possible from the taxation. “If the developers don’t pay the tax by August 31, we will take appropriate action. The SC decision will bring more clarity,’’ said a senior sales tax official.