Govt firm on VAT recovery from builders in Maharashtra
Aug 27, 2012
Source : Business Standard


The Maharashtra government has launched an aggressive drive to recover value-added tax (VAT) from builders and developers on the sale of under-construction flats during June 2006 and March 2010.
The government has mopped up Rs 600 crore from the realty players since 2006, and hopes to recover another Rs 1,000 crore.
The government has ruled out any relief for the developers, making it clear that VAT would work out to much less than five per cent of the agreement value after adjustment of set-off. However, the developers are also required to pay interest for late payment of taxes. A senior government official told Business Standard, “If sales take place after construction, which is after receipt of the occupancy certificate, then the tax is not applicable on such flats or commercial complexes. The liability to pay VAT is on the developer. It is not contingent on collection by developer.”
•Govt hopes to mobilise additional Rs 1,000 crore
•Rs 600 crore recovered for tax liability since 2006 
•Liability to pay VAT on developers
•Realty players estimate new burden on a customer who bought a flat at Rs 50 lakh works out to at least Rs 2.5 lakh
The government official said during recent raids on some builders and developers, it was revealed that they had already collected VAT from home buyers but not paid the money to the treasury. The Maharashtra Chamber of Housing Industry (MCHI)-Confederation of Real Estate Developer’s Association of India (CREDAI) has claimed that each flat buyer in Maharashtra would have to pay up to five per cent additional tax. The new burden on a customer who bought a flat at Rs 50 lakh works out to minimum of Rs 2.5 lakh. According to MCHI-CREDAI official, the developers have started serving notices on those who purchased flats between 2006 and 2010 for payment of VAT.
What has come in handy for the state government is the Bombay High Court order of April 10, 2012, in which the court upheld the constitutional validity of the amendment made by the state government in the definition of “sale” under the Maharashtra Value Added Tax Act, 2002, with effect from June 20, 2006.
The government has said builders and developers can pay tax liability under the composition scheme. A developer would have to pay five per cent tax on the agreement value. Land deduction is not available. Input tax credit is available subject to conditions. Secondly, the deduction of labour and service is available on actual basis. Set-off would be calculated, subject to conditions. Thirdly, the deduction of land cost would be allowed. Thereafter 30 per cent standard deduction from remaining amount would be available according to proviso to sub-rule 1. Set-off would be calculated subject to conditions.
However, in case of tax liability after April 1, 2010, the government has given an additional option whereby the developers would have to pay one per cent tax on agreement value without any land deduction and input tax credit.
MCHI-CREDAI official said they are eagerly waiting for the outcome of an hearing slated for August 28 on special leave petition filed by MCHI-CREDAI against the Bombay High Court order.

Latest Realty News

'Odisha top destination for FDI in India'
Aug 27, 2012
Bhubaneswar: Mineral rich Odisha has emerged as the most favoured destination for overseas investors with investment proposals worth Rs 49,527 crore followed by Andhra Pradesh and Gujarat during 2011-12, according to apex industry body ASSOCHAM. Though barely 17 FDI proposals were filed in Odisha, the state garnered lion's share worth about Rs 49,527 crore in the total FDI proposed across Ind
Houses for poor: Dikshit eyes USAID
Aug 27, 2012
New Delhi: Delhi Chief Minister Sheila Dikshit today sought assistance from the United States Agency for International Development (USAID) for an ambitious project to build houses for economically weaker sections of people in the capital. Dikshit made the request to USAID authorities in the presence of US Ambassador to India Nancy J Powell at a function to release a report on 'Making Health S
Commercial realty demand dips 30%, rentals down 15%
Aug 27, 2012
The demand for commercial real estate has dropped around 30 per cent in the past year, prompted by the economic slowdown, according to industry analysts. This, in turn, has resulted in at least a 15 per cent decline in rentals across many locations. In some areas, office rentals have come down by as much as 50 per cent. In fact, credit to the commercial real estate (CRE) sector grew by just fo
Govt to simplify construction work process, assures CM
Aug 26, 2012
Mangalore, Aug 25, 2012, DHNS State will introduce Infrastructure Bill, says Shetter at Statecon meet Chief Minister Jagadish Shettar said that the State government will make an effort to simplify the process related to obtaining permission to real estate developers, to take up construction work. Speaking after inaugurating ‘Statecon 2012’ organised by Confederation of Real Estate and Dev
Housing finance firms permitted to raise funds through ECBs
Aug 24, 2012
Liberalising overseas borrowing norms, the government today allowed housing financing companies to raise funds through external commercial borrowings (ECBs) route to finance low-cost housing projects. The High Level Committee on External Commercial Borrowings which met here, also permitted FIIs to invest up to USD five billion in rupee bonds within the overall corporate bond limit of USD 45
Special squad to probe land frauds on capital outskirts
Aug 24, 2012
Bhubaneswar: The State Government on Thursday constituted a three-member special squad to probe fraudulent recording of Government land in favour of private individuals in 10 mouzas on the outskirts of the Capital. With the incidence of fraud recurring, the Government suspects role of its own officials in the land scams. The special squad, which will include assistant settlement officers Prad
Former sub-collector, tehsildar in the loop
Aug 24, 2012
Balasore:The State Government is contemplating action against three erring revenue officials, including the former sub-collector of Balasore and tehsildar of Bhogarai, for their alleged involvement in a land scam. The officials had allegedly favoured a private company by leasing out a patch of government land for a hotel near Talasari beach. A probe was ordered following media reports rec
Lighting of 4 city areas to mark local self-government day
Aug 24, 2012
Chief Minister Naveen Patnaik will kick start the Local Self-Government (LSG) day celebrations by inaugurating street lighting at four locations across the city. The street lighting is one of a series of projects lined up by BMC for inauguration, in the run up to the main event on August 31. The new streetlights have been provided at Khandagiri Square to Baramunda, Khandagiri Square to Kalinga
Builders' body asks FM to bring in sops for real estate
Aug 23, 2012
MUMBAI: After finance minister P Chidambaram asked realtors to sell off unsold flats at discounted prices, CREDAI, the apex body of real estate developers in the country, put the ball in the minister's court and said he should take immediate steps to boost housing stock supply through special incentives to the affordable segment. Chidambaram had reportedly asked commercial banks to put pressur
New garden blooms on Bhubaneshwar tourism map
Aug 23, 2012
BHUBANESWAR: The temple city added a new and unique spot in its tourist map, which is not only a visual beauty but also provides olfactory pleasure. Chief minister Naveen Patnaik on Wednesday inaugurated a fragrant flower garden on the premises of Regional Plant Resource Centre (RPRC) botanic garden in a landscape format here. The garden spread across in 3.5 acres of area has more than 70 varieti

Latest Realty News Of State

Realty Talk's