VAT on sale of Fixed Asset
This query is : Resolved
10 December 2008
If ABC Ltd is a service rendering company no liable to pay VAT sells a fixed asset then does it have to charge VAT to the purchaser ?
( At the time of purchase of the fixed asset the VAT on purchase price was capitalized forming part of the cost)
( At the time of purchase of the fixed asset the VAT on purchase price was capitalized forming part of the cost)
10 December 2008
Under Karnataka VAT Act as per Rule 3(2)(g) the amount realised by sale by a dealer of his business as a whole is not includible in computation of taxable turnover.
The status of KVAT is as above. You have to refer your states Act.
The status of KVAT is as above. You have to refer your states Act.
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11 December 2008
Refering to Maharashtra VAT.
02 August 2025
Regarding **VAT on sale of fixed assets by a service company** (like ABC Ltd) in **Maharashtra**:
### Key points to consider:
1. **VAT Applicability on Fixed Asset Sale:**
* VAT generally applies to sale of goods, not services.
* Fixed assets (like machinery, furniture, vehicles) are **capital goods**, not stock-in-trade.
* When a service company sells a fixed asset, this is usually considered a **sale of capital goods**.
2. **Maharashtra VAT Act on Sale of Fixed Assets:**
* According to the Maharashtra VAT Act, sale of fixed assets by a dealer is **not subject to VAT** if:
* The fixed asset is not held as stock-in-trade but as capital asset.
* The sale is not part of normal business turnover.
* If the company is **not registered as a dealer in goods**, VAT should generally **not be applicable** on sale of fixed assets.
3. **Input VAT Capitalized:**
* When the asset was purchased, VAT paid was capitalized as part of asset cost.
* On sale, VAT on sale price is not charged again because:
* This is **not a taxable turnover** under VAT.
* The asset is not sold in course of business as stock.
4. **Exceptions:**
* If the company is registered as a dealer in goods or if the asset is part of business stock, VAT could apply.
* If the asset is sold to another VAT-registered dealer, confirm the nature of transaction with tax authorities.
### Summary:
* In Maharashtra, **sale of fixed assets by a service company is generally NOT liable to VAT**.
* No VAT needs to be charged on sale of fixed assets.
* The VAT paid at the time of purchase remains capitalized and is not refunded or adjusted at the time of sale.
### Key points to consider:
1. **VAT Applicability on Fixed Asset Sale:**
* VAT generally applies to sale of goods, not services.
* Fixed assets (like machinery, furniture, vehicles) are **capital goods**, not stock-in-trade.
* When a service company sells a fixed asset, this is usually considered a **sale of capital goods**.
2. **Maharashtra VAT Act on Sale of Fixed Assets:**
* According to the Maharashtra VAT Act, sale of fixed assets by a dealer is **not subject to VAT** if:
* The fixed asset is not held as stock-in-trade but as capital asset.
* The sale is not part of normal business turnover.
* If the company is **not registered as a dealer in goods**, VAT should generally **not be applicable** on sale of fixed assets.
3. **Input VAT Capitalized:**
* When the asset was purchased, VAT paid was capitalized as part of asset cost.
* On sale, VAT on sale price is not charged again because:
* This is **not a taxable turnover** under VAT.
* The asset is not sold in course of business as stock.
4. **Exceptions:**
* If the company is registered as a dealer in goods or if the asset is part of business stock, VAT could apply.
* If the asset is sold to another VAT-registered dealer, confirm the nature of transaction with tax authorities.
### Summary:
* In Maharashtra, **sale of fixed assets by a service company is generally NOT liable to VAT**.
* No VAT needs to be charged on sale of fixed assets.
* The VAT paid at the time of purchase remains capitalized and is not refunded or adjusted at the time of sale.
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