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No GST: Property buyers still pay VAT, service tax
A sub-registrar, working in Gandhi Nagar sub-registrar office, Vijayawada, admitted that payment of VAT to the state government was must for registration of properties. He said the officials have received orders from higher ups to verify whether the property buyer paid the VAT or not.
Vijayawada: Goods and Services Tax (GST), which was launched with much fanfare by Union government to implement one nation one tax system, has no impact on the department of stamps and registrations in the state.With GST coming into force from July 1, VAT, which was being collected by the state government on purchase of goods, has been scrapped.
Highlights:
- Customers forced to pay VAT
- Revenue official admits having received orders from higher ups to collect VAT
- Builders reportedly hiked service tax from 12 to 18 per cent
Department of stamps and registrations, which is collecting 7.5 per cent stamp duty is continuing its normal procedure. They are insisting that the property buyer must pay 1.25 VAT to be paid to the state government event though GST was being implemented from July 1.
Though the stamps and registrations department is no way connected to the VAT, the department officials are verifying the documents carefully and registering the properties of those, who pay 1.25 per cent VAT on the value of the property.
A sub-registrar, working in Gandhi Nagar sub-registrar office, Vijayawada, admitted that payment of VAT to the state government was must for registration of properties. He said the officials have received orders from higher ups to verify whether the property buyer paid the VAT or not.
The Central government brought the construction sector under services category and increased service tax from 4.5 per cent to 12 per cent. Consequently, the builders are exerting pressure on the apartment flat buyers to pay 12 per cent service tax.
Property rates are very high in Vijayawada and Guntur compared to other parts of the state. Consequently, the property buyers are facing the burden on payment of VAT as well as service tax.
Neither the State government nor the Central Government is directly collecting the service tax from the customers. Builders collect the service tax from the property buyers and later pay to the government. The interesting twist in the issue is the property buyers don’t know how much the service tax paid by the apartment owner to the Central government.
Taking advantage of the demand for housing in some localities, the builders are insisting for payment of 12 per cent to 18 per cent service tax citing that GST rates have increased.
K Venkata Rao, a railway employee, who recently purchased an apartment flat in the city that the builder had exerted pressure on him to pay 12 per cent service tax citing GST.
Customers are demanding that the government should directly collect the service tax from the customer similar to that of stamp duty directly collecting by the state government.
By Md Ameen
