Proposal to levy VAT on realtors spreads panic

Haryana government’s proposal to bring real estate developers under the ambit of Value Added Tax (VAT) has thrown buyers and builders into a tizzy.

During a press conference in Chandigarh on Tuesday, state excise and taxation minister, Kiran Choudhry, told reporters that a survey is being conducted “to bring developers, joint developers, promoters and builders under ambit of the Value Added Tax Act, 2003”.

While buyers fear the additional tax, if approved, will be passed on to them, builders are worried about slower sales in a recession-hit market.

According to the state government’s proposal, builders will be liable to be registered under the Act with the excise and taxation department and pay a prescribed 4% VAT on the contract value of a project. However, no VAT will be applicable on built-up flats and buildings.

Shveta Jain, executive director, residential services, Cushman and Wakefield, said such a proposal is expected to create an upward pressure on prices across Haryana, especially cities like Gurgaon, Sonepat and Faridabad which are part of the national capital region (NCR).

“In states such as Maharashtra, where VAT has been imposed on developers, the tax was passed on to buyers as added cost,” she said.

The additional tax will make other NCR locations such as Dwarka Expressway and the Noida-Greater Noida belt, among others, more attractive to the buyers, Jain added.

The director-general of the Federation of Apartment Owners Association of India, Amit Jain, said, “It’s obvious that the extra burden will be passed on to buyers. Before formulating such a policy, the government should take us into confidence and work out a rational VAT policy, if any, keeping in mind buyers’ concerns.”

On the other hand, Navin M Raheja, managing director of Raheja Developers and president of the National Real Estate Development Council (NAREDCO), expressed concerns that the proposal has come at a time when off-take in the sale of properties is low and this kind of announcement may discourage prospective buyers.

Urging the government to put on hold its decision, Raheja said, “The state should hold an open discussion with real estate leaders and note their points of view before taking any such decision.”

Source: Hindustan Times

BJP seeks CBI probe into plot allotment scam

The Bharatiya Janata Party (BJP) on Thursday demanded a CBI inquiry into alleged irregularities in allotment of plots under the defence services quota in Haryana.

After HT highlighted how several officers fraudulently occupied multiple plots in the state, the party’s media in-charge in Haryana, Umesh Agarwal, submitted a memorandum to Governor Jagannath Pahadia, seeking a suitable investigation in the alleged scam.

In his memorandum, submitted through Gurgaon deputy commissioner PC Meena, Agarwal has alleged that the anomalies could not have happened without the involvement of government officials. He also requested the governor to issue suitable directions to investigate any political patronage enjoyed by the beneficiaries.

On June 7, HT had reported that several ex-servicemen belonging to the Army, Navy and Air Force — even those who have held ranks of lieutenant-general, brigadier and colonel — allegedly forged affidavits to acquire as many as 12 residential plots each under the Haryana Urban Development Authority’s (Huda) plot allotment scheme for defence personnel.

About 24 of the 124 plots listed in Sharma’s complaint are in Gurgaon. To get more plots, many officers had applied both in their names and their spouses’ names in violation of norms. Some even changed their names and forged papers, reveal documents.

Vigilance sleuths attached with the Haryana Chief Minister’s flying squad are inquiring into the complaints.

Meanwhile, after HT reports, Huda on June 10 issued a notice to a serving colonel who owns multiple plots in Haryana, including one in Gurgaon.

Source: Hindustan Times