Late payment for vat on property

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

09 September 2012 Dear Sir / Madam,

I had booked a flat in Mumbai suburbs thane dist in 2009 and the agreement was done in April 2010, after that in OCT 2011 MY BUILDER SEND ME A NOTICE TO PAY VAT WITH INTEREST OF 18% PER year, Kindly suggest my status and what should be paid by me.
i HAVE PAID THIS MONTH.

MJ Krishnamurthy

MJ Krishnamurthy (Expert)
Follow

09 September 2012 Mr Author,
The builders went to High Court objecting to levy of VAT on apartments by the govt of Maharashtra and lost the case.The delay in payment of VAT was witheld by them and therefore they have to pay interest to the govt,not you.Please note that you have to pay VAT on the construction cost only. The price you pay for an apartment includes land cost(30%)and other charges for registration,elctricity and water connection and amenities like club and many facilities. These are not liable for VAT......MJK

Message likes : 1 times

Querist : Anonymous

Querist : Anonymous (Querist)

11 September 2012 Dear Sir,

Thanks for your valuable reply, Kindly note that the current case is for the flats registered upto March 2010, while I have registered in April 2010, Kindly provide your comments on the same.

Awaiting your valuable reply.

Thanks in advance

Upgrade to CAclubindia Pro. Subscribe Now!

MJ Krishnamurthy

MJ Krishnamurthy (Expert)
Follow

12 September 2012 Mr Author,
You may visit www.mahavat.nic.in web site fo more details.The department has given some clarifications and also answered many repeated questions on the tax liability on purchase of flats. According to them there are three options open for the builders to pay VAT on sale of flats viz :1) Under normal vat payment method i.e. out of the total receipts exemption is allowed on land cost,labour charges,and charges collected to meet amenities and payment to other statutory bodies like registration,power and water connection etc.So,on 30-35% of total receipts you may have to pay 14.5% VAt 2)The builder may opt to pay tax under composition scheme(sec 42(3)) In this scheme only land cost and other charges are exempt and on the balance(50%) the dealer may pay 5% VAT. 3) there is also another option open for the builder to pay tax i.e. 1% on the whole receipts. No deduction is allowed.These are options given for the builders. They can collect vat from the buyers of flats at the same rate they have opted to pay to govt and an invioce should be issued for such collection. Please verify these points before paying any VAT to the builder......MJK