AMIT ADHIA (ca) (110 Points)
05 February 2009i have one client who provides services of insurance ,reinsurance and towing of vehicles by tieing up with other agency .recently they are planning to purchase specialized towing equipment and providing them to service providers . and after 2 years once they pay all the amount it will be their ownership on vehicle .
my question is whether at the time of sale or at teh time of last instale ment ,should we collect vat ? if yes we require registration ? and what is the rate for towing vehicles ?
RAJU
(LEARNER)
(1089 Points)
Replied 05 February 2009
Hi Raj.
Is it Hire Purchase. If the payments are made over a period of 2 years, VAT needs to be paid as & when payments are collected as there will be Transfer of Right to Use which is liable for VAT.
Yes you will be liable for VAT if the turnover is likely to exceed Rs.2.00 (Karnataka) in a year and most probably they will be liable for VAT at 12.5%. However, you can avail input tax paid on local purchases of such vehicles.
CAclubindia
