Property question: I have purchased the flat in March 2022 under construction in Mumbai. In the agreement LUC i.e. Land under construction tax should be borne by customer is mentioned. Builder didn't mention any amount in the cost sheet regarding the same. Now along with Final demand letter suddenly builder is asking us to pay LUC tax which is Rs. 5.2 lakhs. I learned that supreme court has already issued order stating LUC collection is illegal and immoral. But builder is paying any heed towards it. Need legal advice here.

Ans: Background of the LUC (Land Under Construction) Tax Issue
You bought a flat in March 2022 in Mumbai.

The agreement states LUC tax to be paid by buyer.

No amount was mentioned in the cost sheet.

Now the builder is suddenly demanding Rs. 5.2 lakhs.

This was not disclosed earlier in cost estimation.

You found court orders say this tax is illegal.

The builder is ignoring those court judgments.

You feel pressured and want a solution.

You are right to ask for clarification.

Let’s break it down and resolve this fully.

Legal Position Around LUC Tax
Supreme Court has given a judgment on this matter.

It has clearly said this LUC tax is illegal.

Also ruled it is immoral to collect such tax.

Property tax should be based on current development status.

Not on future building potential or FSI value.

So tax based on “possibility to construct more” is wrong.

Builders cannot shift such taxes to buyers.

Even if written in agreement, it can’t override court order.

Buyer protection comes from central and state laws too.

Builder’s Demand – Why It’s Wrong Legally
Builder cannot suddenly impose Rs. 5.2 lakhs extra.

Especially if not in original cost sheet.

Courts have struck down such demand by many builders.

Even if agreement says buyer pays, it can be challenged.

Builder hiding LUC amount violates transparency norms.

It amounts to unfair trade practice.

It is also breach of buyer’s trust and contract.

What You Should Do Now
1. Issue Legal Notice Immediately
Send a strong legal notice to the builder.

Mention that this tax is declared illegal.

Say builder must withdraw demand within 7–10 days.

This builds a solid legal case foundation.

Use a lawyer for drafting if possible.

2. Approach RERA
RERA is the best platform in property matters.

File a complaint stating builder’s non-disclosure and illegal demand.

Ask for directions to cancel LUC demand.

You can also seek penalty for mental harassment.

RERA acts fast and strongly in such cases.

3. File Complaint in Consumer Forum
Consumer forum protects home buyers like you.

It allows you to file complaint for unfair charges.

Demand refund if already paid or order to cancel.

Also ask for compensation and legal cost.

You can represent yourself without lawyer if needed.

4. Don’t Pay the Rs. 5.2 Lakhs
Until court or RERA gives order, don’t pay.

If builder forces withhold of possession, show legal notice.

Possession delay can be added to complaint later.

No legal ground supports this tax today.

Why You Are on the Right Side
Law is fully in favour of buyers now.

Builders using fear and lack of awareness to collect.

Supreme Court ruling is final and binding on all.

Even municipal corporations have accepted the court ruling.

Thousands of Mumbai buyers already fought and won.

You are well within your rights to resist.

How to Strengthen Your Legal Position
Collect all agreement papers and cost sheet copy.

Take screenshot or letter of builder demand.

Keep all payment receipts if anything already paid.

Save email or communication where builder mentioned LUC.

Present all these before RERA or consumer forum.

With proper documentation, you will win easily.

If You’re Afraid of Possession Being Withheld
Builder cannot deny possession if all dues paid.

LUC tax is not a valid due now.

If they hold keys, file complaint immediately.

Attach it with your legal notice too.

Delay in giving possession is punishable by RERA.

Your Next 30-Day Action Plan
Day 1 to 7: Draft and send legal notice.

Day 8 to 15: File RERA complaint online or physically.

Day 15 to 20: Also file in consumer forum as parallel route.

Day 20 to 30: Collect more flat owners with same problem.

Group action adds weight before authority and media.

Real-Life Cases Have Been Fought and Won
Buyers got full refund for paid LUC tax.

Courts fined builders for harassment and misuse.

Builders dropped demands when shown legal orders.

You are not alone in this situation.

Every buyer has legal shield now.

Extra Tips to Handle This Smartly
Never argue verbally with builder staff.

Always write or email with record.

Don’t sign any final demand letters blindly.

Join hands with others in your project.

Legal cost can be shared in group case.

Finally
Don’t fear the builder’s demand.

You have court rulings supporting you.

Act legally, not emotionally.

File complaints and send notice.

Don’t pay illegal tax demand.

Legal system will support you fully.

Your rights as a buyer are protected.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment