Houses get even more out of reach | mumbai | Hindustan Times
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Houses get even more out of reach

If you plan to buy a house, it’s best to do so before April 1. Or at least get it registered before then. That’s because Finance Minister Sunil Tatkare announced the levy of a 1 per cent Value-Added Tax (VAT) on the contract price of house purchases, report Naresh Kamath & Sayli Udas Mankikar.

mumbai Updated: Mar 26, 2010 01:29 IST

If you plan to buy a house, it’s best to do so before April 1. Or at least get it registered before then. That’s because Finance Minister Sunil Tatkare announced the levy of a 1 per cent Value-Added Tax (VAT) on the contract price of house purchases.

Tatkare said in his Budget speech that VAT would be applicable for all builders and developers in Maharashtra. However, the levy is likely to be passed on to flat buyers.

So, a flat costing Rs 50 lakh would mean that the buyer would have to shell out Rs 50,000 more even before his or her loan is sanctioned.

This is a burden flat buyers would have to bear in addition to the rise in construction materials like cement, which builders pass on to customers.

To top it all, a rise in home loan rates is right around the corner, said experts.

The 1 per cent VAT follows the 10.3 per cent service tax that was proposed in the Union Budget. That too is a tax on builders, but it will inevitably be passed on to home buyers.

Both, developers and housing activists, flayed the state government’s move as regressive. “It will only result in making homes even more unaffordable and out of reach for the common man,” said advocate Vinod Sampat, president, Cooperative Societies Residents Users Welfare Association.

“Housing is not a luxury, but a basic necessity. It is time the government gives incentives instead of burdening people with taxes,” said Subodh Runwal, director, Runwal Group of Companies. He said developers would be left with no option but to pass on the tax to buyers.