The Builders' Association of India (BAI), Maharashtra branch, has threatened to stop construction work in the state from September 1 if the state government does not withdraw its decision to levy 5% value added tax (VAT) on constructions completed between June 2006 and March 2010.
BAI state branch chairman Manoj Potekar said on Monday that the Maharashtra sales tax department's order directing developers and builders to deposit the VAT on flats sold between June 2006 and March 2010 before August 31 is unjust and impractical. "The total amount which the developers will have to deposit, along with interest and penalty, will run into crores of rupees. It will be cumbersome to recover this amount from customers who have now settled into their dwellings," Potekar said. He said it is a serious misconception that developers have recovered, but not deposited with the state, the VAT which the state is now demanding. "As the issue was sub-judice we have not recovered the tax. We have instead obtained undertakings from customers that they will pay up if the court verdict validates the state's decision to charge 5% VAT on constructions between 2006 and 2010," he said. Potekar said the state government should completely abolish the 5% VAT implementation order or charge 1% VAT, as home buyers are being charged from April 1, 2010. Looking at the mammoth task of recovering the VAT from customers, the government should consider an amnesty scheme involving a one-time nominal payment, he said. Meanwhile, the hearing on the special leave petition filed on the issue by Credai, an apex body of developers, in the Supreme Court on Tuesday is eagerly awaited by builders and flat buyers.