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CA Sandesh Mundra

Consult Us For Construction

MHADA and VAT

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Buyers who purchased under-construction Mhada flats in the past six years may not have to pay the value added tax (VAT).

Legal and tax consultants have told Mhada that its projects do not attract VAT. The reason: Unlike in private transactions, Mhada does not enter into any sale agreement with its buyers. Mhada issues allotment letter to buyers after it has received the entire flat cost in maximum three installments. 

The law states that builders will have to pay a 5% VAT on sale of properties between 2006 and 2010. The VAT post 2010 will be 1% of the cost of the property.

"In private transactions, a developer enters into an agreement to sale with the buyer after receiving a certain amount of the total flat cost of the under-construction flat. A sale deed is registered after the full flat cost is paid," said a Mhada official.

Mhada, however, is still playing cautious. "Though we are firm in our view and believe our buyers, majority from the middle class, should not be taxed. The sales tax department has not sent any notice to us for VAT payment," the official added.

"We are focusing on private developers. We do, however, believe Mhada and Cidco will have to pay VAT," said a tax official. Tanaji Satre, Cidco vice-chairman, said prima facie he believes VAT is not applicable on them, but he has to check.

Source - http://www.cainindia.org/news/10_2012/mhada_flats_do_not_attract_vat_tax_legal_experts.html

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CA Sandesh Mundra, Consultant – Management Audit and Indirect Taxation - Chartered Accountant, Diploma in Information System Audit, Diploma in Insurance & Risk Management , Certificate from ICAI on International Financial Reporting Standards. Actively associated with clients in the industrial construction sector since last 9 years.He possesses special skills in structuring the indirect tax component of the works contracts and as management auditor, has visited several construction sites in various states like Orissa, Rajasthan, Gujarat, Maharasthra, Madhya Pradesh etc. During the course of said visits he has been to very large industrial complexes, refineries, power plants etc

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We are Ahmedabad based professional consulting firm. We are providing various services to Construction, Real Estate and Project Companies in various areas like Indirect Taxation – Service Tax & Multi state VAT consultancy, ERP implementation, Site & Management audit, Designing Tender & other related contractual documents etc.