A Value Added Tax (VAT) is a consumption tax. It is applicable on a number of things and is basically a kind of sales tax. For a seller or a dealer it is the tax that adds value to the material, service or product. From the buyer’s point of view it is the tax the buyer has to pay over the purchase price of the service or product.In the state of Maharashtra no VAT was levied on property sale or purchase prior to 2006. In 2005 the Supreme Court passed an order which put builders and contractors in the same bracket. In the 2011 budget that VAT will be applied on the sale of property which is an immovable asset. The decision was a move towards enhancing the revenue of the state.On 6th August, 2012 the state sales tax department issued a circular to ask the developers to pay VAT on flats, bungalows and shops they had sold between 2006 and 2010. Though the state sales tax department made it very clear that paying the tax was the builder’s liability and not the property, the builders started to mail flat owners who bought flats between 2006 and 2010 to pay the VAT amount. The builders calculate VAT to be close to 5% but according to the state sales tax department it is about 3%.For now the buyers are paying the VAT. Since property is an immovable asset, VAT cannot be charged on it. But VAT is charged over the cost of construction materials such as grills, tiles etc. or on the total agreement amount. The average construction cost in and around Mumbai varies between Rs 1,100 and Rs 1,500. Thus in a 1000 sq ft flat which has a construction cost of Rs 1,100 will run a VAT of Rs 22,000 if VAT is calculated to be 5% of the total construction cost of the flat.To avoid any confusion about how much VAT the buyer has to pay they had been asked to demand a VAT invoice which clearly define the complete break up and the exact amount that is to be paid by the buyer. It will also clearly show the method the builder has used to calculate the VAT. VAT is not applicable on the cost of the land, raw material and the labour cost.It is unclear how the builder gets to levy the tax on the buyer though the state sales tax department mentioned that the builder should be paying it. However it is a foregone conclusion that no matter what tax or extra expense is added to building development, the buyer will directly or indirectly end up paying it. So VAT on properties is an extra burden on buyers. The tax payable is applicable on the materials bought for construction. Thus the builder can claim the exemption of tax already paid while making the purchase. This can lower the VAT amount even below 5%. This means, if the developer wants then he can lighten the burden on the buyer by earning credits on tax payment made on various expenses.займ на карту без отказов круглосуточновзять кредит онлайн