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CIDCO asked to pay Rs 135 cr as sales tax

Already reeling under the impact of slowdown in the property market, developers’ fear they may have to bear additional burden if the City and Industrial Development Corporation (CIDCO) has to cough up Rs 135 crore as sales tax.

CIDCO
CIDCO officials claim that since they are a government body, they cannot be charged sales tax. Representation pic

According to a notification sent by the state’s sales tax department, CIDCO has been asked to pay the huge amount as tax on all plots sold between the year 2007 to 2012. Builders dread that CIDCO would pass the charge onto all plots in future, thereby escalating land prices. According to builders, CIDCO never charged them any sales tax till now, and are concerned that if the sales tax were applied, then land sold to them in future would also have an inflated price tag.

CIDCO, the planning authority for Navi Mumbai, holds maximum parcel of land and has been selling land to private developers, housing societies and others via auction. “There’s a scarcity of land in Navi Mumbai, and CIDCO is the only planning authority that provides land that has a clear title, and hence the prices for CIDCO land is considerably high. If CIDCO adds sales tax, it would mean land prices shall rise further leading to more trouble for us and home buyers,” said a builder.

Arvind Goel, president MCHI-Navi Mumbai said, “This notice has raised serious concerns whether CIDCO is a planning authority that works for the government or a profit making body. There’s too much confusion regarding policies at the planning body. For the last two and half years, CIDCO doesn’t have a managing director. If this is the state of affairs, how do we expect clarity on issues.”

Taxing blow
According to Mohan Ninawe, PRO for CIDCO, they received the notice from the tax department recently and are looking into the matter. However, top CIDCO officials claim that since they are a government body, they cannot be charged sales tax.

Tanaji Satre, joint managing director for CIDCO, said, “We are a government body, how can we be charged sales tax for selling plots?” Pramod Hindurao, the chairman for CIDCO, claimed that they would look into the matter first and if needed would also take the legal course to handle the situation.

“Firstly we will talk to the government on why we got this notice, and would try resolving the matter. However, if needed, we may take legal recourse,” said Hindurao. Sales Tax Commissioner Sanjay Bhatia did not respond to messages and calls, while his deputy commissioner was not able to comment on the same. 

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