Vat query

My client is engaged in contrct business.  It has given Jeep and Car etc. on Rent for contract period.  It has received charges for the same.  The party to whom Jeep and Car were given on rent, has deducted TDS U/s. 194C of income tax.   Whether the dealer is liable to VAT on Jeep or Car given on rent ?  Whether this will be covered by 12.5% VAT as VAT on Hire Charges.

Replies (5)

Mr. Ranawat, 

         Which State VAT Act is applicable to you? Rent received from transfer of right to use on Jeep & car is taxable if  the income from right to use  any goods is chargeble under the provisions of State VAT Act applicable to you. TDS deduction is  under the provisions of the  IT Act but VAT liablity on  total receipts at the ratre specified in the charging sedtion of VAT Act of your State.Thanks.

After implementation of Positive list of service tax w.e.f. 1st July-12, Hiring of goods are covered under Declared Services by appendix-2 entry no (f) section 66 E(F) " Transfer of goods by way of hiring or in any such manner without transfer of right to use such goods" therefor you have to examine whether the goods transfer with control/right and possession or Not(Like insurance cost should be borne by lessee) if So VAT is applicable otherwise Service Tax Shall be applicable on the value charged.

Rajasthan State VAT Act is applicable to my Question about VAT on Hire Charges.

Mr. Ranawat,

  On a plain reading of  Sec.2 (35) (iv) of RVAT Act, 2003, definition 'sale' includes income received from transfer of right to use goods  for any purpose. In charging section 3 to 7 of the Act I think  there is no provision to levy tax on right to use goods. Anyway I am not conversant with your State VAT Act, you are requested to contact either statutary authorities or a tax practitioner or an advocate to know about your tax liablity under RVAT Act. Thanks. 

What will be the answer if the above question act refers to APVAT act??

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