MORALITY
OF TAXATION
Recent imposition of 5% VAT on property purchased
between 20-6-2006 and 31-3-2010 has rattled the buyers. It is time, we should
think about morality of such taxes, more so when these are levied with
retrospective effect.
RETROSPECTIVE TAXATION IN ITSELF IS IMMORAL. It smacks
of administrative arrogance and deserves to be condemned. Unless, people rise
and register strong protest, government will be emboldened to come up with
similar back-dated burdens.
Levying of any new tax on property is mischievous,
malafide and obnoxious because the house that you buy is already loaded with
multiple layers of taxes. Taxation trail starts right at the inception of
property development. It begins with stamp duty on acquisition of land and ends
with stamp duty paid on final purchase value of the property. In between there
is a long list of taxes, levies, duties that get piled upon. More than 50 different
taxes get added on to the basic costs. Every single construction material (and
there are more than 100 of these), bears the costs of Central Excise, Sales Tax
(VAT), Octroi and transportation. Add to it, the service tax / works contract
tax collected by professionals like legal advisors, architects, RCC consultants,
construction contractors, labor contractors, chartered accountants, landscape
advisors, advertising agencies and many more. Put together, these constitute a
sizeable burden on property buyers.
Every statutory authority from municipality to state
and central government, extracts its pound of flesh in one form or the other.
Besides, hefty amounts are spent bribing politicians, slum-lords, and bureaucracy
for obtaining plethora of permissions.
All these expenses get embedded into property costs and
are borne by purchasers.
And in spite of such heavy dose of taxation, if the
government gets away with imposition of additional burden and that too with retrospective
effect, then we have only ourselves to blame. If we are spineless to surrender
then we deserve to be tax-flogged from time to time.
NOW, think what government has done for you after collecting
huge amounts in taxes?
Even today:
- There are
instances of same property being sold to more than one buyer.
- There are
instances when a building comes up using FSI far above permissible limits
or having more floors than approval.
In both cases, onus is on
buyer to check the facts. There have been cases when even the courts have
refused to side the buyers and ordered demolitions of unauthorized constructions.
Gullible buyers not only lose shelter but huge amounts spent on buying flats
while the builders and authorities who closed their eyes when the construction came
up, get away. Why they are not asked to reimburse the costs to victims?
Why can’t there be a fool-proof
procedure that permits builder to only sell what is approved and legal?
- Occupation
Certificate is a responsibility of the builder. Yet, buyers are penalized
for builder’s failure to do so. Why these fines are not recovered from the
builders?
- ‘CONVEYANCE’ of property is something our
builders love to conveniently forget. No fool-proof measures have been
taken to protect the interests of the buyers. Government should make it
compulsory for builders, not only to obtain Occupation Certificate but also
to ‘form society’ and ‘Convey’ the property before handing over possession.
Heavy penalties should be imposed on the builders in case of their failure
to do so.
- What about the
quality of construction? Are the quality norms being adhered to? Scant
respect is paid to provisions regarding adequate curing time and
water-proofing. Leaking walls and ceilings are common-place. Barring some
exceptions, most builders get away with use of sub-standard materials, poor
construction, and bad fittings.
How does the government monitor
or regulate quality?
Time has come for people to refuse payment of VAT. If
necessary, the flat owners and builders should form a united front to carry
their fight to logical end.
Above arguments relate to a specific incidence of tax
being imposed. However, scope of arguments should cover morality of even
existing tax structures vis-à-vis highly inflated costs of administration.
