Come June 2013,buying and selling a flat will become all the more cumbersome for the parties concerned (Buyers and sellers).
The Union Budget Finance Bill 2013, makes it mandatory that the buyer of a flat priced Rs 50 lakh and above will have to deduct 1% of the amount and pay it to the govt’s kitty.For this the buyer will have to open a TDS account with the tax authorities,register himself and obtain a TAN number,which he will have to quote on every deduction he makes from his payment to the builder or owner.This rule does not make a distinction between under construction or ready to move flats.It does not apply to agricultural land.Almost 5 lakh homes are set to be delivered in 2013.Even if people have made part payment before june 2013,they will be forced to deduct 1% of the total amount from the remaining installments.There is no clarity on whether the deduction will have to be made by the buyer or his bank (if the buyer is taking a loan).
This is another classic example of the total mess created by such measures in the past too.We had the service tax and vat issue in which the govt just passed a rule without giving any indication of how the vat would be calculated.Then came the property tax issue where the BMC was sending provisional property tax bills on the basis of a property’s rateable value.Earlier the tax was calculated on the basis of rent paid by tenants.Rateable value is calculated on the basis of age,area and the nature of construction of the building,ready reckoner rates etc.This was liable with retrospective effect from 2010.The last date for payment of this property tax was fixed at 31st march but was extended by 3 months after protest from the citizens who were suddenly faced with paying property tax arrears of the past 3 years at one go.
All these issues really makes the people wonder whether the govt really applies any thought before altering policy.
TDS payment has been simplified and can be paid online at the link below…
Pay TDS on this site
The Union budget of 2013 presented by Chidambaram has had the opposite effect on real estate industry.Already facing a severe slowdown,the finance minister has made life even more difficult for the real estate industry.
The following are the main points of the budget with respect to the real estate trade.
- 1% TDS (tax deducted at source) on all real estate transactions over Rs.50 lakhs
- Service tax raised to 3.7% against the earlier 3.09% if the house is worth more than 1 crore or the area is over 2000 sq ft.
- Excise duty on marble increased from Rs 30 per sq ft to Rs 60 per sq ft.
- No ‘infrastructure’ status to real estate sector.This would have enabled real estate companies/builders to get sops like cheap loans etc from the govt and banks.
- The only ‘benefit’ that the budget has for a buyer is an additional 1 lakh rupee deduction for interest payment on a first time housing loan.But the catch is that the loan amount has to be less than 25 lakhs.
So basically,it means nothing.
So all said and done,the going is only going to get tougher for the housing industry post the 2013 budget.
Many builders have ignored the Govt deadline to register and pay VAT before the October 31,2012 deadline despite Supreme Court rap.About 5257 builders registered themselves to pay VAT for the sales between June 20,2006 to March 31,2010 with the Sales Tax Dept.However,approx 2200 builders from Pune have not paid VAT.Most have showed nil returns.Most builders ask buyers to pay up for their VAT liabilities but social activists say that VAT payment is the responsibility of the person registered with the sales tax dept.A public interest litigation has been filed to prevent builders from extorting VAT from buyers.It will come up for admission on March 8.Builders say that they are entitled to collect VAT from buyers as the sales tax dept has supported their stand of issuing a debit note to flat buyers for the same.
This will be the second time that the dept will raid builders to recover VAT.Many thought that govt will reduce thier tax liability hence they did not pay it,though they may have collected it from flat buyers.
It is amazing,that after months of confusion and court battles the govt is yet to specify whether flat buyers are liable for VAT or not.Just one more proof of how the flat buyer is left to fend for himself while builders display their normal high handedness.
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