A house to live peacefully is what many of us desire. Buying a house property or home for our family involves a lot of emotional decision. And in the process of taking a decision we often encounter several experiences. Right from selecting a suitable location, to availing home loan - there are several experiences and trauma which many home buyers undergo. A home buyer is further drained out by the amount of taxes he or she has to pay followed by the registration charges. But one can’t do away with these statutory obligations either, because unless one doesn’t defray the same, the legal possession of the property remains under question.

At present too, the tussle between the State Government and the developers over the quantum of Value Added Tax (VAT), is adding to the woes of home buyers.

On August 6, 2012 the Maharashtra State's Sales Tax Department issued a circular to developers saying VAT would be levied at the rate of 5% of the value with retrospective effect on flats, shops and bungalows sold by them between June 20, 2006 and March 31, 2010. Further, along with the revised VAT, there would also be a 15% p.a. interest for late payment of VAT and the penal interest at 25%.

But later a fresh calculations from the Sales Tax Department, pegged the VAT at 0.5% to 3.0% of the value of the property mentioned in the agreement. Moreover, as an intermediate relief to the home buyers Maharashtra Finance Minister, Mr Ajit Pawar indicated that the state government will provide a waiver on 15% interest as penalty on value-added tax (VAT) levied on property transactions between 2006 and 2010. Moreover, the State’s Finance Department also said that VAT will be charged only on the cost of building material and not on the cost incurred on labour, engineering, architecture and construction services. But it is noteworthy that an official announcement on this will be made only after September 8, 2012 since the Gram Panchayat Elections will be held on the same day.

We are of the view that, property buyers who have already bought house property between the period mentioned above should approach their developers in case the VAT has not been collected by the developer. Also such property buyers should wait for further clarifications until the State Government provides clarity on such contentious issues.

Property buyers in our view, should not make any delay in paying the registration and stamp duty as soon as the purchase of house agreement is duly signed. Moreover, it is a prudent step to get the completion date from the developer and also have a mention of the same in the agreement in case on under construction properties.

Last but not the least, the Government has to take numerous steps in order to make this whole procedure to buy or sell a house property a lot more transparent. Instead of having several taxes, there should be a single tax regime laid down. This will make buyers more comfortable as there will uniformity in charging of taxes. In case of delay in project completion by the developer, there should adequate relief measures for the home buyer. Implementing a single tax regime will also help in curbing use of black money in such property transactions which are made to save the overall tax. All in all, a Real Estate Regulator with adequate authority and responsibility should be set to regulate the real estate market.