renting of generator set

[satbir singhwahi]

Generators are given on rent , Rs. 90000 per month. whether service tax applicable under rent of immovable property

[YAGAY andSUN]

Dear Satbir,

Renting of Generators would not fall under the category of Renting of immovable property as it would fall either under the taxable category of Supply of Tangible Goods under Service Tax or under Deemed sales i.e. Right to use under the PVAT Act. On this transaction, whether Service Tax would be payable or VAT is payable will depend on the principal of effective control.

If your company has the effective control on the GEN Set, then, service tax would be applicable. If the client/customer has the effective control, then, VAT would be applicable under Right to use (i.e. Deemed Sales).

Regards,

YAGAY and SUN

(Management, Business and Indirect Tax Consultants)

[Mahir S]

Sir,

I assume that generator given on rent shall be applicable for service tax as services are provided and also not covered under negative list. However, it shall not fall under Renting of immovable property, as explained above.

[Madhukar N Hiregange]

The pure provision of the equipment with the effective control and possession given to the customer would be liable for local VAT. The VAT ITC on the purchase of the genset would also be available.

If the same is operated by you or you have the effective control though the possession is with the customer [ in his premises] then liable for service tax. ₹ 10 Lakhs exemption exists for ST. If exceeded in other transactions then the cenvat credit of CED paid on the genset available for set off against the ST payable- 50 % in year of receipt and 50% in subsequent year of use. Depreciation of credit part not to be claimed.

AI Summary

Renting Generators: Service Tax Applies if Company Controls; VAT Applies if Client Controls. VAT ITC Available with Client Control. A query was raised about whether renting a generator for Rs. 90,000 per month is subject to service tax under the category of renting immovable property. Responses clarified that renting generators does not fall under this category. Instead, it may be classified under Supply of Tangible Goods or Deemed Sales, depending on who has effective control over the generator. If the company retains control, service tax applies; if the client has control, VAT applies. Additionally, VAT ITC is available if the generator is provided with effective control and possession to the customer.