Builders/Devlopers

[ishwar hegde]

we have built up 29 flats in our own land with our own funds. We want to sell 20 flats to the purchasers and keep 2 for our own use and remaining are given on rent bases Now Karnataka VAT dept claims that we should pay 14% VAT on sale proceeds ( that too on market price and not on registration value). We contested that it does not covered under vat because it is sale of immuvable property and not asale of goos and nither it falls under a construction contract. Please guide us

[YAGAY andSUN]

Kindly show them the definition of Goods as mentioned in the Sale of Goods Act as well as incorporated in the KVAT Act.

Most probably, KVAT Authorities must be asking the payment of WCT on the entire contract amount.  Please discuss this aspect  with you VAT consultant.  To this extent the views of the Department look genuine.

[puneet mittal]

what will be the position if flats are sold during construction stage under dvat act?

AI Summary

VAT applicability on sale of immovable property disputed; department treats flat sales as taxable supplies under VAT. Whether VAT applies to sale of completed flats on developer's own land is contested: the department seeks VAT on sale proceeds based on market value. The legal issue is whether such transactions are sales of goods, contracts of service/works contract, or transfers of immovable property outside VAT. Advisers suggest invoking the statutory definition of goods and examining if the department treats receipts as subject to works contract taxation; specialist consultation is recommended. A related question concerns VAT treatment of sales during construction stage.