Seeking to fight the vexed VAT issue on flats in Maharashtra, a consumer group called FORAM–Flat Owners’ Rights protection Action committee in Maharashtra – has been formed with consumer interest groups coming together.
FORAM will mobilise public opinion against the VAT on flats sold between 2006 and 2010 which has come like a bolt from the blue, said Atul Puranik, convener of the new platform.
“As it is, the common man is burdened with a series of taxes and a homer buyer has to pay even much more in terms of service tax, stamp duty and registration and now the VAT,” Puranik, who is associated with the Council for Fair Business Practices, pointed out and called for an immediate end to VAT on housing sector.
Puranik said there is no justification for levying axes on the material used in housing since all these items are subjected to sales tax. VAT, actually, amounts to double taxation, he said.
Chandrashekhar Soman, another convener of FORAM, said, ”We will mobilize public opinion against all over Maharashtra with district level committees VAT and appeal to the government to scrap the tax altogether for flat buyers.”
“This is just the beginning,” he said and expressed the hope that people a cross section will join in the movement.
Asserting that FORAM will raise voice on behalf of the common man, Mr Soman said there was no justification for VAT on property because buyers pay stamp duty and service tax. He asked why should there be VAT on immovable property.
He pointed out that there was a lot of confusion on the percentage of VAT to be levied and “even the government officials come up with different figures”. Chandrashekhar Soman also heads the Consumer Rights Protection Forum of Shiv Sena at Panvel.
FORAM received support from elected representatives like Mr. Vivek Patil, MLA from Uran. Many consumer rights activists and advocates promised to lend a helping hand to the anti-VAT drive.
“I was shocked to read about the Maharashtra Government’s announcement to charge VAT at a high rate of 5% on flats and other properties bought from 2006 to 2010,” said Mr Patil commenting that: “I strongly feel it is very, very exorbitant.”
“Several people who chose to buy flats in Raigad district because of the price advantage as compared to Mumbai and its suburbs have approached me with this new VAT issue. “My fundamental question is: why should there be VAT on immovable property? VAT should totally be scrapped be it 1% as applicable from April 1, 2010 or the high rate of 5% from 2006 to 2010,” Patil said.
Echoing similar views, Mr patil pointed out that the common man is being “crushed” by the government policies both by the central and state Governments. “The uncontrolled increase in prices of essential items like food, electricity and petroleum products, along with taxes on everything that we buy had made the life miserable for many,” he said.
2 Comments
THERE IS NO QUESTION OF CHARGING VAT ON FLATS SOLD,CAUSE THE SERVICE TAX DEFINES,THAT THE BUILDER IS JUST A SERVICE PROVIDER ,BUYING MATERIAL ON BEHALF OF THE CONSUMER ,FOR THAT ALREADY SERVICE TAX HAS BEEN CHARGED AND PAID.A SERVICE PROVIDER CANNOT CHARGE VAT.
IT IS IMPERATIVE TO GARNER PUBLIC OPINION ON THE LEVY OF MVAT AND ALL AFFECTED BUYERS SHOULD COME TOGETHER, PROTEST AND FIGHT FOR WITHDRAWAL OF THE SAME. MVAT CANNOT BE PASSED ON BY THE DEVELOPER TO THE END CUSTOMER SINCE THE CUSTOMER IS ALREADY PAYING SERVICE TAX ON THE SERVICES PROVIDER BY THE DEVELOPER. IF MVAT IS INTRODUCED BY THE GOVT. IT SHOULD BE THE LIABILITY OF THE DEVELOPER TO PAY THE SAME. SECONDLY THE METHODOLOGY OF LEVYING MVAT IS INCORRECT. THE DEVELOPER SHOULD CLEARLY SPECIFY ON WHAT COMPONENTS OF THE TOTAL AGREEMENT THE VAT IS CALCULATED SINCE LAND COST, LABOUR COST ETC SHOULD BE REDUCED FROM THE TOTAL CONSIDERATION AND THE MVAT SHOULD ONLY BE ON THE INPUT COST OF RAW MATERIAL USED. HENCE THE MVAT SHOULD BE MUCH LESSER THAN 5% DEMANDED BY THE GOVT. ON THIS BASIS THERE EXIST A MAJOR CONCERN SINCE SALES TAX IS ALREADY LEVIED ON THE COST OF MATERIAL AND PAID BY THE DEVELOPER. HENCE MVAT WILL LEAD TO DOUBLE TAXATION. WHICHEVER WAY CALCULATION IS DONE THE BUYER IS NOT LIABLE TO PAY THIS AMOUNT WHICH IS THE DEVELOPERS LIABILITY. WOULD REQUEST FORAM AND CFBP TO JOIN HANDS AND RESIST THE ATTEMPT BY DEVELOPERS TO PENALISE THE END CUSTOMERS.