Vat on flat purchase

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

19 October 2012 Respected Sir/Madam
I have purchased a flat on 24/10/2007 registered on25/10/2007,
we have receive demand letter from builder on 17/09/2012 to pay 5% vat on purchase price to him that we didnot pay, now on 19/09/2012 we have received a letter demanding for 2% Vat on purchase price, with studying the information on this site I come to know that VAT is not applicable on ready possession flat , when I bought the flat it was ready possession ,we have architect letter stating the construction was completed on 29/08/2007 was 100% complete. the property in Thane Maharashtra.
so please advice us do I liable to pay vat on it If no do i need to give written feedback to developer

Your prompt response is highly appreciated
thanking in advance
It will be great if you can mail your answer on vivekdpatil@sify.com

Ksreddy

Ksreddy (Expert)
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19 October 2012 Dear Sir, it seems to be you purchased flat from builder hence you are liable to pay vat.

CA. Vikash Dwivedi

CA. Vikash Dwivedi (Expert)
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19 October 2012 read this

https://www.caclubindia.com/articles/service-tax-and-vat-on-under-construction-flat-unit-14745.asp

Querist : Anonymous

Querist : Anonymous (Querist)

19 October 2012 Dear Sir
But the flat was in ready possession still i have to pay the vat?

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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02 August 2025 Hi! Here’s the key point on VAT on flat purchase in Maharashtra (Thane included):

**1. VAT Applicability on Flats:**

* VAT is generally applicable on the **sale of under-construction flats** (i.e., when the builder sells the property before the construction is completed).
* For **ready possession flats** (where construction is 100% complete before sale), **VAT is typically not applicable** because the sale is considered a sale of immovable property, which is outside the VAT net.

**2. Your Case:**

* You purchased the flat on **24/10/2007**, with possession ready before that (architect certificate states 29/08/2007 completion).
* According to Maharashtra VAT rules, VAT should not apply to ready possession flats sold after completion.

**3. Developer’s Demand for VAT:**

* Builder demanding VAT on a ready possession flat after such a long time seems incorrect based on the facts you shared.
* Sometimes builders mistakenly demand VAT even if not applicable, or they might be calculating VAT on some other component (like car parking, club membership, or additional charges).

**4. What to Do:**

* You can reply in writing to the developer, stating that VAT is not applicable on the sale of ready possession flats as per Maharashtra VAT Act and supply the architect’s completion certificate as evidence.
* If needed, seek a written clarification or legal opinion from a tax consultant or chartered accountant familiar with Maharashtra VAT laws.
* You may also consider raising the matter with the Maharashtra VAT department or consumer forum if the builder insists unfairly.

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**Summary:**
Since your flat was ready possession at the time of sale (confirmed by architect certificate), VAT should **not** be payable on it. You should communicate this clearly to the builder and ask them to justify their demand.

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If you want, I can help draft a formal reply letter to the builder based on these facts. Would you like that?

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