Don't pay retrospective VAT to builders: BJP to flat buyers

"There is no basis for collecting VAT with retrospective effect. The notices issued by builders to those who bought flats during 2006-10 are illegal," state BJP spokesperson Madhav Bhandari told reporters here.

A rough estimate showed that the number of flats sold during the period, in Mumbai and other major urban centres in the state, was around 30 lakh, Bhandari said.

Bhandari's comments came in the backdrop of the confusion prevailing over the Value Added Tax (VAT) on property purchased between June 20, 2006 and March 31, 2010 and panic among flat buyers, who have received notices from developers asking them to pay arrears.

"This is nothing but extortion by the builders. The aggrieved flat buyers can directly approach the sales tax commissioner," Bhandari said.

The Bill to levy 5 per cent VAT was passed around six years ago, but its implementation and recovery of tax was stuck as developers moved court against it.

The Bombay High Court recently ordered the developers to pay the amount due by August 31, 2012 or pay interest and penalty. Developers challenged the order in the Supreme Court which extended the payment deadline to October 31.