Service tax on equipment hire

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

17 October 2012 dear expert
we are giving machinery on rent or hire to road manufacture who is a govt contractor, and the contract for road is given by the govt and he is exempt for service tax, but he is saying that his services are exempted so service tax will also not be charged on machines taken on rent from us

CA Pooja Agarwal

CA Pooja Agarwal (Expert)
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17 October 2012 construction of road for use of general public is exempted from service..

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Querist : Anonymous

Querist : Anonymous (Querist)

17 October 2012 thanks but we are providing machines on rent to contractor we are not contractor, what is the position in st

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)
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24 July 2025 Here’s the clarity on your issue:

* **You are providing machinery on rent/hire to a road contractor** who has an exempted contract (road construction for public use is exempt from service tax).

* However, **your service of hiring out machinery is separate from the contractor’s service.**

* **Service tax liability on equipment hire (machinery rental) is independent of the contractor’s exemption.**

* Even if the contractor’s road construction services are exempt, **you must charge service tax on your equipment hire service** unless a specific exemption applies to your activity.

* So, **you need to levy service tax on the rental charges of your machinery provided to the contractor.**

**Summary:** Contractor’s exemption on road construction does NOT exempt you from charging service tax on machinery hire.

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If you want, I can help you with the relevant service tax notifications or rates applicable to equipment hire services. Want that?

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