MUMBAI: A day after a cabinet meeting discussed the contentious issue of value-added tax (VAT) for flats, pressure is mounting on chief minister Prithviraj Chavan to reduce it from 5% to 1%.
It has been brought to his notice that it is wrong to charge 5% VAT, particularly for flats sold after 2010 as the relevant charge is 1%. It is incorrect to recover the amount with retrospective effect, the CM has been told.
Industries minister Narayan Rane said even if VAT has to be paid by the developer, it will eventually be recovered from the buyer. "Even if the builder pays VAT, he will recover it from the buyer later. Under such circumstances, if the government is keen to protect the interests of the buyer, it should reduce the amount from 5% to 1%," he said.
A senior bureaucrat said while no decision has been taken on extending the deadline or reducing VAT yet, Chavan is in favour of lowering the amount to protect the interests of flat buyers. "We expect him to take a decision within a week after consulting senior cabinet members," the bureaucrat said.
On the issue of a sudden hike in the prices of Mhada's Malwaniflats, a minister said when the agency issued an advertisement, it said the apartment would cost Rs 34 lakh each. But now, it has asked for an additional Rs 15 lakh without assigning any reasons. "The matter was brought to the notice of the chief minister, who admitted that it was a mistake on the part of Mhada officials," the minister added.
Mhada MD Satish Gavai said it was an error and a high-level probe had been ordered. Mhada was in the process of fixing responsibility, he added. "When Mhada issued the advertisement, it quoted a price of Rs 34 lakh. Later, we observed that it was an incorrect price and the actual cost was Rs 49-50 lakh. We are considering giving the buyers more time," Gavai said.