Vat on rent

VAT (Legacy) 1531 views 6 replies

 

Vat is applied on Invoice @ 12.5% for Lease and rent charges of machinery and equipments, (MAHARASHTRA STATE), Is it ok to pay or not, and If ok please give details.

Replies (6)
As per my knowledge, Service Tax will applicable instead of VAT.

VAT is applicable on Lease and Hire purchase of machines... You have to pay and take credit for the same..

As per article 369 2a of act, it is deemed sale and chargeable to VAT.

Only if the effetive control and possession of the said machinery is given it is liable for VAT. That means mere transfer of possession is not enough but right to use it absolutely is important to decide whether it is hire/lease or mere service contract. The lessee should have absolute freedom to use the goods transferred. On the other hand if the said goods is transferred for a particular period for a particular purpose, then it is only service and not lease. 

e.g. If a pedestal boat or a Dashing Car is rent out in a Entertainment Theme Park to enjoy riding self or driving the dashing car self for a particular time then it is only Service and not lease, because here no absolute right to use the goods is  given. You can use the above goods only for riding within the premises and for a particular pupose only. This is not hiring or leasing to attract deemed sale tax. 

Yes VAT is aplicable on Hire Charges.....

You have to pay n you can avail the same as input credit..............

But wot u do of dat input Credit if u r not dealer of MVAT??


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