chandigarh the haryana government has announced plans to impose value added tax vat on the builders developers and promoters of real estate projects in the state keeping in view the spur in activity of this sector the move aimed to shore up revenues of the state could hurt the endusers or buyers of the property to whom the tax may be passed on by the sellers this tax could see most of the builders falling in its ambit as it is proposed to be levied on any person or entity with a turnover of rs 5 lakh haryana excise and taxation minister kiran choudhry disclosed on tuesday that they have initiated a survey to know about builders who could be the potential tax payers we would hold a meeting in july to decide the next course of action she added in the fresh initiative the tax would be levied only on those developers or builders who construct flats or houses on behalf of the purchasers the builders would have two options they can pay at the rate of 4 of the total project cost under a scheme of excise and taxation department otherwise the builder may produce bills of all inputs like cement or iron bought for the construction for calculation of vat to be paid however in the second option vat wont be imposed on the cost of land and labour involved in the project haryana has different slabs for vat on goods it is 5 for iron bar and 132 for sand if a builder opts for the first option then one would have to pay rs 4 crore for a project of rs 100 crore the amount of the project would be calculated on the basis of turnover of the builder from selling flats or houses terming the haryana governments announcement as a negative signal a builder said there should not be any tax on the real estate sector as it would indirectly affect the endusers construction of houses is a social service as there are millions of people still homeless any new tax would adversely affect the construction activities in the state said pankaj garg a builder from panchkula chairman of motia developers pawan bansal said the developers would be forced to increase the rates of flats or houses after introduction of the new tax system it would adversely affect the already burdened real estate industry he added according to kiran choudhry businessmen who are involved in ecommerce would also be brought under the ambit of vat she was talking to mediapersons at chandigarh after launching an online grievance redressal portal wwwharyanataxcom for traders and a tollfree service