Developers,consumer groups spar over VAT

CREDAI-Pune Metro said concumer rights activist Sudhakar Velankar had contradicted his recent media statements by saying before the Bombay High Court that “builders have the legal right to recover VAT from flat purchasers” but in a judicious manner. President of CREDAI-Pune Metro Satish Magar said the PIL thus is line with their contention that VAT should be recovered from consumers.

Velankar,the founder-president of Grahak Hitwardhini had filed a PIL seeking a directive from the HC to the state government to adopt only one method of assessment,and “until such time amend the Act allowing flat purchasers to pay the lowest assessable amount.”

Velankar,on the other hand,countered that CREDAI is misleading the public as one of the contentions in court is that “builders shouldn’t collect VAT from customers.”

Magar,however,said that in compliance with the interim order of the Supreme Court on payment of VAT “most developers have filed returns with the government and paid tax.” Magar said they are waiting for a response from the state government about lowering VAT from 5% to 1%. The matter was expected to be decided on Wednesday but had not come through.

A CREDAI member said the method recommended by the state government to pay VAT is “very complex.”

“Under the provision of MVAT 2002 for the period from 20 June 2006 to 31 March 2010,the calculation of MVAT liability is very complicated and cumbersome. After going through all calculations of deductions and set offs,tax liability can vary from 0.6 to 5 in individual cases and this will further vary in projectwise calculations on year-to-year basis,” read a CREDAI statement. A CREDAI member said that even as the dealer is free to “take the method that leads to the lowest payment,the difficulty lies in whether the ready reckoner or cost of land shown at the time of stamp duty should be made the basis for payment of VAT.”