Service Tax on Rent/Hire Charges for movable Items

[GANESH B]

Service Tax on Rent/Hire Charges for movable (like machinery) items/equipment

[Surender Gupta]

Kindly see provisions of Supply of Tangible Goods Service 65(105)(zzzzj) in Taxable Services

[Guest]

In the case of rent/hire of movable items where control and possession is transferred to the lessee, then it may be subject to service tax under the head 'Financial leasing including equipment leasing and under hire purchase', if control and possession is not transferred and VAT is not paid, then it may be subject to 'supply of tangible goods service'. So the applicability depends on the nature of arrangement/agreement.

AI Summary

Control and possession determines service tax classification for hire of movable equipment under leasing or supply regimes. Service tax on hire or rent of movable items depends on whether control and possession are transferred: if transferred, classify as financial leasing (including equipment leasing) or hire purchase for service tax; if not transferred and VAT is not paid, it may fall under the supply of tangible goods service. Determination requires examination of the agreement's nature and allocation of rights and possession.