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TDS applicability on hiring on plant and machinery with vat

CA Anuj Mittal (Finance Manager) (66 Points)

15 September 2011

We hired the Plant and machinery in Haryana, we are receiving the Bill of rent including local VAT, i want to know about the applicability on TDS deduction on this transaction.

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15 Replies

ARUN KUMAR (Financial Consultant ) (992 Points)
Replied 15 September 2011

Sir,

In My View it is not Possible To Add VAT on Rent bill.Only Service Tax Will Charged.

Pradip (Accountant/Management) (106 Points)
Replied 15 September 2011

I think Mr. Arun is correct. Sales Tax will not applicable for Rent, however service tax may be charged only and in this case TDS will be deducted on the amount excluding service tax.

CA Anuj Mittal (Finance Manager) (66 Points)
Replied 15 September 2011

As per haryana VAT ruling, anyone can charge the VAT of Hired Plant & machinery, Problem is that, what the TDS will be deducted on that.

CA Anjali Aswal (CA) (215 Points)
Replied 15 September 2011

As per article 366 of constitution sale also include tax on transfer of right to use any property whether for a specified period or not. Lease of plant & machinery is a deemed sale thats why Local VAT has been charged. You can deduct TDS on the bill cause ultimately you are using the service which comes under the purview of TDS.

C.A. Sandeep Wawhal (Chartered Accountant PGDFM BCom.) (1823 Points)
Replied 15 September 2011

Mr. Arjun Kumar TDS is applicable @ 2% under Sec. 194I State Vat matter will not change the Income Tax (Central Govt Tax) rules.

Puja das (Chartered Accountant) (34 Points)
Replied 15 September 2011

Circular No.4/2008 dated 28.04.2008 states that TDS is not to be deductible on service tax component on rent.The reason given by CBDT are that provisions of section 194-I requiers deduction of tax at sources on "any income by way of rent" therefore neither service tax nor vat should be included for TDS purpose.

C.A. Sandeep Wawhal (Chartered Accountant PGDFM BCom.) (1823 Points)
Replied 15 September 2011

Anjali Aswal - as you explain, but it is not mentioned in article whether it is direct tax or indirect tax.

please confirmed.

asoltech (CA) (24 Points)
Replied 15 September 2011

We have purchased boarding passes and received bill including VAT @ 5%

Do we too hve to add VAT while raising a bill to a party to whom we sell those passes.?

Sourav Modi (Learner!) (306 Points)
Replied 15 September 2011

Originally posted by : CA Anjali Aswal
	As per article 366 of constitution sale also include tax on transfer of right to use any property whether for a specified period or not.