FG on Renting

[Srivatsan Krishnamachari]

Dear Sirs,

Ours has finished goods of Pre-fab buildings. We received an order our products for (FG) renting purpose and returned back once the work is completed. What is the procedure need to fallow in relation to Excise/Service tax to avoid audit complications.

Thanks for your support

Regards

Srinivas

[Mahir S]

Sir,

Your query could not be properly understood..

However, there does not appear to be any excise / service tax liability.

[Srivatsan Krishnamachari]

I will explain in details. We have received an order from our customer. Customer wish to take our material on renting basis at sites where as this material is finished goods for us. Customer is not ready to purchase the material. Since our product is building material, need to take to the customer site (out side our factory premises) and to be given for renting. In this transaction, how to meet excise or service tax obligations.

Hope this is clear

Thanking you,

BR/Srinivas

[Mahir S]

Sir ,

1) You need to take permission from excise department for removal of finished goods outside factory premises without payment of duty.

2) You need to pay service tax for the rent received under the category of supply of tangible goods for providing setvices.

3) It would be better to start a trading firm and clear finished goods to such firm on payment of duty , who would thereafter supply such good on rent.

Sent from my Samsung Galaxy smartphone.

AI Summary

Tax treatment of renting finished goods: excise permission for removals and service tax applies to rental receipts. Movement of finished goods out of factory premises for temporary external use requires excise department permission to avoid duty on removal; otherwise the transfer may be a dutiable clearance. Charges for supplying tangible goods on rent are liable to service tax as provision of services. A practical alternative is to transfer cleared goods to a trading firm on payment of duty, which would then supply the goods on rent, thereby segregating excise and rental service tax obligations.