TAXING TIMES Mhada, Cidco, MMRDA may get a VAT blow

Thane: State agencies like Mhada, Cidco and MMRDA may have to shell out crores of rupees towards value-added tax (VAT) for sale of flats over the last six years. 

    The biggest blow will be dealt to Mhada, which has sold over 10,000 tenements across the state since 2006. The law states that builders will have to pay a 5% VAT on sale of properties undertaken between 2006 and 2010. The VAT payable post 2010 will be 1% of the cost of the property. 
    Having constructed tenements and sold them through a lottery draw, thereby recovering administrative, actual land and construction costs from buyers, Mhada qualifies as a builder. "Prima facie it looks like we will have to pay the VAT. We are calculating the amount that we will have to pay. It is going to be huge figure given our volumes of sales," said Satish Gavai,Mhada vice-president. 
    Buyers had been informed at the time of sale that in case of a tax liability in the near future, the authority reserves the right to recover the entire amount from the buyer, said Gavai, adding that the agreement betweenMhada and the buyers has a clause, which puts the onus of tax arrears on the purchaser. However, an official said, "Recovering the arrears will be a big worry. There is every likelihood that buyers must have sold off the flats. In such an event, the original owner will be reluctant to pay up and so will the one occupying the place at present." 
    Tenements built under the slum redevelopment scheme will also come under the VAT purview and builders who have constructed them will have to pay the arrears, it is learnt. 
    Cidco, which has constructed homes and shops in Navi Mumbai, Aurangabad and other cities, too will have to pay tax on all flat sales effected post 2006. 
    "MMRDA too will invite the tax if its proposal, pending before the CM, to sell a portion of the flats constructed under the rental housing scheme gets a nod," an official said.