Delhi govt to impose VAT on chartered buses

The Delhi government has decided to impose Value Added Tax on buses carrying office goers, students and others on contract basis, a move that is likely to increase fare in all such public carriers.

"The government has asked us to pay 12.5 per cent VAT. Since we are already paying service tax, this added tax burden will have to be borne by the passengers," Delhi Contract Bus Association general secretary Harish Sabharwal told reporters.

Opposing the move, he said, if implemented, the owners of such buses will end up paying a total of 25 per cent tax, 12.5 per cent each on VAT and service tax.

When contacted, Delhi's Finance Minister A.K. Walia said the government was seeking VAT from contract bus operators following a particular section of the VAT Act, "Right to Use".

However, Sabharwal argued that the operators do not fall under the "Right to Use" provision of VAT Act since services were being provided on hire in contractual form and service tax is being already paid on contractual amount.

"Nothing is being transferred, sold or alienated to hirer. The absolute control remains with the bus owner on vehicle as well as staff of bus," he said.

Unlike those taxis which are given on rent for personal use, Sabharwal said, in our case, the "the staff employed are accountable to owner of the bus in discharging services at all stages".

Walia said a meeting will be convened soon involving all concerned to ascertain whether the bus operators fall under the VAT category.