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Lease Rent of Machinery

CA. BIJENDER KR. BANSAL (ACA, B.COM) (8143 Points)

10 May 2008

Dear All,

Our Company is desrious to lease a machinery to a other company. Lease rent is Rs.22000/- Per month.

Whether service tax will be charged on such lease rent ?

& Whether we have to registerered ourself for such service ?

What is other aspect of accounting of such lease rent. ?

Please give solution asap.

thanks in advance.

With warm regards

Ca. B.K.BANSAL

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7 Replies

S.P.Mahanta (Internal Auditor) (647 Points)
Replied 10 May 2008

Applicability of Service Tax is subject to threshold limit of Rs. 800000 as turnover for service rendered in FY 07-08, & Rs 1000000 in FY 08-09.

value of service rendered in the example is less than threshold limit.

No service tax registration is required.

TDS u/s 194 I is applicable.

Pl intimate for other inputs.

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CA Hemant T Dewani (Chartered Accountant) (3356 Points)
Replied 10 May 2008

service tax is applicable when your gross receipt is rs 1000000/- or more in the f y 2008-09 otherwise registration is not required

Shyam Lal Naik (Service) (6156 Points)
Replied 11 May 2008

Ur case does not appear to be falling under any taxable catagory. WEF 16/05/2008 renting of immovable property, where VAT is not applicable, will be covered under Service tax.

Pls check, whether u r liable under VAT / Service Tax.

CA. BIJENDER KR. BANSAL (ACA, B.COM) (8143 Points)
Replied 12 May 2008

'Dear All,

Thanks for reply.

Our company already cross limit of Rs. 10,00,000 in other services like Job work. Hence no question of Limit.

Now question arise only in relation to appliacablity of service tax and registratin of that service .

Please suggest.

Thanks & Regards

Ca. B.K.BANSAL

(Guest)

Dear All,

Our comapny involved in construction business, now we givien on machinery to our sub-contractor on rent. I wants to know weather we are charged Service tax or we cahrged VAT on the above said Rent.

Am highly thankful for your view.

Regds

S.P.Shukla

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CA Ravish Trivedi (The Possibilities are Infinite...) (772 Points)
Replied 15 October 2008

U can only pay service tax on the value of services provided .

Madhukar N Hiregange (Chartered Accountant) (39034 Points)
Replied 16 October 2008

Originally posted by :CA. B.K.BANSAL
"	Dear All, Our Company is desrious to lease a machinery to a other company. Lease rent is Rs.22000/- Per month. Whether service tax will be charged on such lease rent ? & Whether we have to registerered ourself for such service ? What is other aspect of accounting of such lease rent. ? Please give solution asap. thanks in advance. With warm regards Ca. B.K.BANSAL	"

The right to use a machinery is a subject matter of VAT. However if the possession is not given and the lessor retins the control and possession buy the same is used by the lessee then wef 15.5.2008 it would be liable under supply of tangible goods.