The Hindu : Tamil Nadu / Chennai News : Builders express guarded optimism about VAT

Online edition of India's National Newspaper
Sunday, Jan 07, 2007
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Tamil Nadu

Tamil Nadu - Chennai

Builders express guarded optimism about VAT

Staff Reporter

``It remains to be seen how far the benefits will be passed on to consumers''

HOPING FOR A TURNAROUND: The VAT regime may check the spiralling cost of construction, but builders are awaiting a government notification. — Photo: K. Pichumani

CHENNAI : City-based builders expressed guarded optimism about how the housing sector will benefit from the newly introduced Value-Added Tax (VAT) system in the State.

According to R. Radhakrishnan, former national president of the Builders' Association of India, bricks, and blue metal along with PVC pipes may cost less. "It could lead to reduction in construction cost," he said.

However, many builders and promoters said they were waiting for a government notification before coming to a conclusion about any price change. V. Shankaram, director of Ramaniyam Real Estates, said that confusion about the system still prevailed among builders with many unaware of the procedures to be followed.

He pointed out how VAT rates would be applicable only if the materials were purchased within the State. Also, the bill should list out all items purchased and the tax on them along with other details. Though resale tax of one per cent had been done away with for items such as sanitary ware and ceramic tiles, builders said they would wait for a detailed notification to find out under which of the three tax slabs, the items would fall. N. Sairam, partner, G.R. Natarajan and Company, said builders would not have to pay sales tax for wooden doors and windows. Another area, where there is a probability of reduction, was cement, said L. Moorthy, president, Builders' Association of India's Chennai unit.

While Mr. Sairam and Mr. Moorthy maintained that the system had been simplified as far as the builders were concerned, they said it remained to be seen how far the benefits would be passed on to consumers.

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