Vat on rental of video recording equipments, led etc

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Querist : Anonymous

Querist : Anonymous (Querist)

10 April 2015 whether a VAT is applicable on rental of video recording equipments like LED Screen, Cameras etc in gujarat or service tax is applicable on such services ??????

CA AnKiT BoHrA (AB)

CA AnKiT BoHrA (AB) (Expert)
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10 April 2015 no vat is not applicable on rent...

service tax is applicable if u r crosses the limits...

Querist : Anonymous

Querist : Anonymous (Querist)

14 April 2015 Rent on equipments can be considered as a deemed Sale????? because right to use has been tranfer to the lessee and service tax is not applicable to deemed Sale.

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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02 August 2025 Great question! Here’s a detailed explanation about VAT vs Service Tax on renting video recording equipment like LED screens, cameras, etc., specifically for Gujarat:

### VAT on Rental of Equipment (Gujarat)

* **VAT Applicability:**
VAT is generally **not applicable on pure rental or lease transactions** for movable goods like video equipment because VAT is a tax on the sale of goods, and rental is treated as a service, not a sale.

* **Exception:**
If the transaction is structured as a **"deemed sale"** under VAT law—i.e., if the rental/lease agreement transfers the *right to use* the goods for a period exceeding a threshold (often 3 months or more), VAT may apply as it is considered a "transfer of right to use goods."

In Gujarat, VAT on "right to use" goods is charged at 5% (earlier it was 12.5%) as per the Gujarat VAT Act.

### Service Tax Applicability

* **Service Tax:**
Renting or leasing of movable tangible goods is a **taxable service under service tax**, except if the rental is in the nature of a sale or "deemed sale." Service tax applies if your aggregate turnover crosses the threshold limit (currently ₹20 lakh or ₹10 lakh for special category states, but check the current limits).

* **If deemed sale applies:**
Then it’s VAT (not service tax), as "right to use" is treated like sale of goods.

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### In summary:

| Situation | Tax Applicable |
| -------------------------------------------- | ------------------------------------------- |
| Pure short-term rental (less than threshold) | Service Tax (if turnover exceeds threshold) |
| Long-term rental transferring right to use | VAT @ 5% (Gujarat) - considered deemed sale |
| If deemed sale, no Service Tax | |

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If you want, I can help you draft a clear note or find exact legal citations from Gujarat VAT or Service Tax rules. Would that be helpful?

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