AN English national daily reported that realtors on December 17 urged the government to reduce registration fees, taxes, and other charges to help low- and middle-income families buy homes at reduced cost. Presently, land registration fee is between 14 and 19 per cent of total land price, while flat registration fee is between 12.5 and 15 per cent of the same.
The real estate business has not been going well for the last couple of years due to exorbitant price of flat and registration cost. The National budget 2015-16 imposed Value Added Tax (VAT) on apartment price including cost of land at the rate of 1.5 per cent for up to flats of 1,10sft, 2.5 per cent up to 1,600sft and 4.5 per cent for flats of over 1,600sft floor space. In addition to VAT, four per cent gain tax, three per cent stamp duty, and two per cent registration fee each for government and City Corporation, totalling 11 per cent payment were imposed. When one purchases a piece of land no VAT is to be paid, but when the person constructs a building on the land he/she has to pay VAT on construction cost of the building. As most people cannot afford to buy a piece of land and construct a building on it, they opt for flats. The flat purchasers have to pay VAT for the portion of land as well as for the flat (part of building). It is not rational.
The flat purchaser should pay registration fee, gain tax and stamp duty on the portion of land of the flat-concerned. He or she should not pay VAT, registration fee, gain tax and stamp duty against the flat. The government imposed registration fee, gain tax and stamp duty on the portion of the land against the flat concerned. In the same manner, at the time of registration, a flat purchaser should pay stamp duty, registration fee and gain tax on the value of land occupied by his/her flat.
Md. Ashraf Hossain
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