Date:19/11/2008 URL: http://www.thehindu.com/2008/11/19/stories/2008111954660400.htm

Kerala - Thiruvananthapuram

Plea to waive VAT on sale of flats, houses

Special Correspondent

Thiruvananthapuram: The Kerala Builders Association (KBA) has urged the government to waive the value-added tax on the sale of new houses and apartments.

Addressing a press conference here on Tuesday, KBA president M.D. Jairaj and general secretary T. Padmaraj said exempting the housing sector from VAT was imperative to help it tide over the current financial crisis. “Imposing VAT on sale of new units amounts to double taxation. As builders, we pay VAT on all inputs including construction materials. It is over and above this that we have to levy 3.03 per cent VAT from the client.”

‘Sales affected’

The association claimed that the compounding rate had affected the sale of new dwelling units through the State. “Clients are put off by the additional financial burden. As a result, registration of new buildings has come down drastically. The decision of the Maharashtra State government to waive VAT on sale of new flats has given a boost to the construction sector in the State,” Mr. Jairaj said.

‘Reduce duty’

The association demanded a reduction in registration stamp duty to 5 per cent. “Even then, the government gets value-added tax at the rate of 4 to 12.5 per cent on purchase of construction materials. Reducing the stamp duty will improve the sale of apartments and thereby bring more revenue to the government.”

Mr. Jairaj said reviving the construction sector was crucial to improving the State’s economy.

“We employ lakhs of unskilled workers. Construction of residential space is a vital element of infrastructure development. The money generated by this sector trickles down to various levels, ultimately benefiting society at large,” he added.