VAT on Loading charges & Transportation.

This query is : Resolved

Alpa Doshi (Querist)
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02 April 2009 This is regarding a Iron & Steel delear in Hyderabad, Andhra Pradesh.

All the dealers in Hyderabad are charging VAT on labour (Loading) charges & Transportation as follows.

Tax Invoice

1. MS Sheet 1000 Kgs @ 30.00 = 30,000.00
2. Hamali 30.00
3. Transportation 150.00
Sub Total 30,180.00
VAT @ 4% 1,207.20
Round off -0.20
Total 31,387.00

My query:

1. Can VAT be charged on hamali (loading & unloading of Goods)at the shop or godown?
2. Can VAT be charged on the transportation of the goods on a local vehicle?

Note: The charges are actuals as paid to the labourers & the Vehicle drivers/owners.

All the dealers are preparing the invoices in the same format. Could you please resolve the query with relevent rules for the VAT act.

Dayal

Dayal (Expert)
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05 April 2009 The rules are amply clear, that vat is chargeable on the value of goods. The value of goods constitutes all such expenses related to the sale.

The vendor is claiming the amount as part of sales proceeds therefore subject to VAT ( inclusive)

Ideally you should ask them to charge freight on TO pay basis, this will reduce your element of tax on VAT, however you will be subject to payment of service tax, which infact is just 2.58% as against VAT which is 4%/ 12.5%

You may evaluate your position in view of the above clarification

Should there be a need for additional inputs do write back on dayalkundani@gmail.com