Provisions of Value Added Tax (VAT) and Service Tax (ST) - Awareness Among the Flat Purchasers

The government has taken different initiatives in order to provide houses (as shelter is one of the basic necessities of human being) to the poor people by forcing the builders to construct small housing units, at affordable sizes and rates in order to shift the poor from the slums to proper housing societies which will improve their living conditions. If the government is so concerned regarding the upliftment of the poor people, then why is the government financially burdening them further with the VAT and Service Tax.This research paper discusses the provisions and regulations made regarding VAT and Service Tax with reference to residential flat purchasers during period 2006 to 2010. The author is of the opinion that all first time residential flat purchasers should be exempt from VAT and Service Tax.Recently the government has amended the rules of VAT and it is implemented with retrospective effect leading to confusion in the minds of all the stake holders.Retrospective effect of tax laws should be reconsidered and tax laws should be made applicable only from the date of the judgment or the date of amendment of law, whichever is later. If done so, it will provide support to the first time purchasers who already bear the burden financially. This paper also focuses on the decision of the judicial court regarding VAT and Service Tax laws. In this paper 48 residential flat purchasers in Pune city who have purchased new residential flats (first or second house) were interviewed and their responses have been summarized here.