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VAT on leased F&F

kunal (student) (25 Points)

06 June 2010

Hello members,

I wish to know, if there is any VAT liability on ''Rent paid on Furniture and Fixtures'' as per APVAT and also in any other State VAT Act.

Thnx.

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Venkateswara Rao Sapare (Accountant) (1500 Points)
Replied 06 June 2010

Originally posted by : kunal
	Hello members, I wish to know, if there is any VAT liability on ''Rent paid on Furniture and Fixtures'' as per APVAT and also in any other State VAT Act. Thnx.

1) First it is essential to understand what is VAT? Where does it apply? There was a tax called "Sales tax" which was applicable on sale at every time, and which was having cascading effect. In the recent past, with great coordinated and concerted effort among state governments, some state governments were able to adopt this new way of tax, which is actually called 'VALUE ADDED TAX'. In Andhra Pradesh, VAT turned effective from 01.04.2005, and called 'ANDHRA PRADESH VALUE ADDED TAX,2005". In this tax structure, all listed goods in APVAT, will be liable to tax at every point of sale with a set-off of tax levied at the earlier stage. This resulted in avoidance of cascading effect.

"if there is any VAT liability on ''Rent paid on Furniture and Fixtures'' as per APVAT". As this transaction is not at all a SALE, it does not come under the purview of VAT.

2) Next, ''Rent paid on Furniture and Fixtures'' , this transaction leads to attract "SERVICE TAX".

3) "if there is any VAT liability on ''Rent paid on Furniture and Fixtures'' as per APVAT and also in any other State VAT Act." On this point, let us under stand that "ACT" and "Rules" of VAT of different states in India are almost on similar lines. Variance is very minimal.