Friday 26 March 2010

Maharashtra Government imposed 1% Vat on property sale from April 1, 2010 in its Budget for 2010-11

The Maharashtra Government has decided to levy one per cent Value-Added Tax on property sale from April 1, 2010 in its Budget for 2010-11. All sale agreements registered on or after April 1 will attract one per cent on the contract price of flats mentioned in the agreement of sale.
For deals closed before April 1, the old method of computation at five per cent would be followed, subject to the Bombay High Court stay on collection being lifted, according to a Sales Tax officer.
The officer pointed out, this time round, the State had brought in an amendment to VAT in the Assembly and hence there could be no further dispute on the matter.
With the court stay in force, builders were depositing the VAT component in an escrow account pending the outcome of the case. Some of them were even accepting post-dated cheques and indemnity bonds for the amount from buyers.
The Maharashtra Finance Minister, Mr Sunil Tatkare, said, while announcing the State Budget on Thursday, the levy was in accordance to the Supreme Court judgment which said “VAT becomes leviable on the sale of construction material used in the construction of flats,”
Mr Pranay Vakil, Chairman, Knight Frank India, said the decision though prospective, ended an issue that was unclear till now.

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