Vat on home..
This query is : Resolved
30 September 2012
We had bought a home at Miraroad 2 years back.. now the builder is asking us to pay VAT...
Is there any VAT applicable for House??????
at what rate??????
Is there any VAT applicable for House??????
at what rate??????
01 October 2012
Hello!
Pratik Kambli.
as you wrote in your query u have purchased the house 2 years back if u have purchased a ready made flat than u will not have to pay any vat but if u have purchased a under constructed flat from 2006 to 2010 than u have to pay VAT @ 5 % on the amount what u have paid during that period and there is no need to pay any extra amount as VAT on the amount what u have paid before 2006.
That’s not all. There could be additional burden due to interest and penalty charges which could increase the liability by another two per cent.
and for further assistance you may mail me @ca.shekhar.panwar@gmail.com
or can call me also 9899822020
Pratik Kambli.
as you wrote in your query u have purchased the house 2 years back if u have purchased a ready made flat than u will not have to pay any vat but if u have purchased a under constructed flat from 2006 to 2010 than u have to pay VAT @ 5 % on the amount what u have paid during that period and there is no need to pay any extra amount as VAT on the amount what u have paid before 2006.
That’s not all. There could be additional burden due to interest and penalty charges which could increase the liability by another two per cent.
and for further assistance you may mail me @ca.shekhar.panwar@gmail.com
or can call me also 9899822020
01 October 2012
but why should we pay the VAT???? Its the mistake of a builder that he dint collect VAT 2 years back??? Why shud we pay Interest and Penalty???
02 August 2025
That's a very common and frustrating situation.
Here’s the gist:
* **VAT is normally payable on sale of under-construction properties**, not on ready possession flats.
* If you bought the flat **2 years ago and it was under construction**, technically VAT was due on the amount paid.
* Usually, **the builder is responsible to collect and deposit VAT**, but sometimes they may fail to do so.
* If VAT was not collected/paid earlier, **the tax department can ask the buyer to pay VAT, along with interest and penalty**, even if it wasn’t collected at the time of purchase.
* The logic is: VAT is a tax on the transaction, and the department can recover it from the buyer if the builder fails.
**Your rights:**
* You can check if the builder has actually paid the VAT or not.
* If the builder is at fault, sometimes the buyer can insist builder to clear the dues and avoid penalty.
* You can also approach the tax authorities for a review or clarify your case if you feel the demand is unfair.
**Bottom line:**
* Usually, if VAT was not paid on an under-construction flat, the buyer becomes liable.
* Interest and penalty are often added by default.
* For ready possession flats, VAT should not be charged.
If you want, I can help draft a letter or response for you to send to the builder or VAT department?
Here’s the gist:
* **VAT is normally payable on sale of under-construction properties**, not on ready possession flats.
* If you bought the flat **2 years ago and it was under construction**, technically VAT was due on the amount paid.
* Usually, **the builder is responsible to collect and deposit VAT**, but sometimes they may fail to do so.
* If VAT was not collected/paid earlier, **the tax department can ask the buyer to pay VAT, along with interest and penalty**, even if it wasn’t collected at the time of purchase.
* The logic is: VAT is a tax on the transaction, and the department can recover it from the buyer if the builder fails.
**Your rights:**
* You can check if the builder has actually paid the VAT or not.
* If the builder is at fault, sometimes the buyer can insist builder to clear the dues and avoid penalty.
* You can also approach the tax authorities for a review or clarify your case if you feel the demand is unfair.
**Bottom line:**
* Usually, if VAT was not paid on an under-construction flat, the buyer becomes liable.
* Interest and penalty are often added by default.
* For ready possession flats, VAT should not be charged.
If you want, I can help draft a letter or response for you to send to the builder or VAT department?
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Itr 1 processing
- Off Market debit and credit transaction
- Showing Gift from relative in ITR for this year
- Reporting Income under Section 44ADA
- Short Term Capital gain on shares bought and sold after 2018 onwards
- Form 10E u/s 89(1). Need clarification because experts opinions differ !!!!
- ITR 1: Details for showing Exempt Income
- ITR selection for salaries and capital gain less than L
- ITR returnFY25-26
- ITR 2 Short Term gain & Long term gain
- Gst invoice numbering and delivery challan numbering
- Sales amount in Gstr1
- E Commerce GSTR1 & 3B how to file
- GST Cancellation without jurisdiction
- Legal Opinion on Registrar's Refusal to Investigate a Society for Non-Renewal and Non-Compliance
- GST Refund_RFD-01
- Form10BD was uploaded successfully without any Error but after 24 hours, Form10BE are not available
- Annexure B utility for GST Refund
- Tax amount diff in Gstr1 and 3B in tax compare reports
- Tds on GST in connection with sale to public company
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
