VAT on sale of Fixed Asset

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CA. AmirSavant (Querist)
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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)

CA. Raviprakash M.S

CA. Raviprakash M.S (Expert)
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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.

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CA. AmirSavant

CA. AmirSavant (Querist)
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11 December 2008 Refering to Maharashtra VAT.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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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.

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