Vat on under constrution property - final amount
Silent victory
(Querist) 24 September 2016
This query is : Resolved
Our builder continues to ask for VAT on flats purchased in 2008 from 2012 onwards . His amount has remained constant and at approx 5 % from 2012-2016 despite various trade circulars providing clarity on methods all the way upto 2014.
1. His requests are only in form of letters
without any computation
2 Through RTI i know he did not pay vat
in time and received notices and
finally an ex parte order with
interest and penalty exceeding the vat
amount .
3. He only claims his method is under Sec 58 but at 5 % his amount is 3 times what we think it should be
4. Society has been conveyed and possession letters given long back
Questions for experts
1.Is he within MVAT law to claim a figure from buyers without giving any backup or tax invoice
2.Is he oblidged to give proof of payment if i insist .
3. if there is a vague clause in contract that service tax and all other taxes to be borne by buyer ... does it become a perpetual surviving clause or it has a time limitation of 3 years fro his demand
Raj Kumar Makkad
(Expert) 25 September 2016
The VAT is payable from 20 June, 2006 by the builder only when the amendment in the Act in consonance with Bombay High court judgment had been inserted.
Developers can discharge their tax liability by any of the following option:-
From 20.06.2006 to 31.03.2010
1. Composition Scheme U/s 42 (3) -
Under this scheme developer has to pay 5% tax on the agreement value. Land deduction is not available. Input tax credit is available subject to the reduction of 4 per cent.
2. Actual Expense Method U/r 58-
Under rule 58, the deduction of Labour & service charges is available on actual basis. Land deduction is also available. Set-off will be calculated subject to the conditions u/r 53 and 54.
3. Standard Deduction Method U/r 58-
Under rule 58, the deduction of land cost will be allowed. Thereafter, 30% standard deduction from remaining amount will be available as per proviso to sub-rule 1. Set-off will be calculated subject to the conditions u/r 53 and 54.
After 01.04.2010
The developers can opt for fourth option also, under this option u/s 42 (3A), developer has to pay 1% tax on agreement value. No land deduction and input tax credit is available.
Needless to mention that, the developers will be required to make the payment of interest according to the provisions of law.
Rajendra K Goyal
(Expert) 25 September 2016
Repeated query.
http://www.lawyersclubindia.com/experts/Vat-demand-on-under-construciton-flat-purchased-in-2008--617586.asp
Kumar Doab
(Expert) 25 September 2016
Why to repeat?
Expert Mr. Makked has posted a very relevant input.
Silent victory
(Querist) 25 September 2016
will be grateful if the experts can give a point wise opinion on each of the 3 questions i have asked
Raj Kumar Makkad
(Expert) 26 September 2016
As you query stands repeated so you should not expect experts to further oblige you.
