Starting on Jan 1, 2018, the Value Added Tax is going to hit consumers very hard. In regard to car parking, 5% VAT will be applicable in case the parking is not part of the lease. The tax will be charged on residential and commercial buildings for sure, however, the public parking might be exempted from the VAT.
“If parking is charged separately in addition to lease, yes parking charges will be subject to VAT,” said Nirav Shah, director, Fame Advisory.
Everything depends on the lease; if the owner of the property is providing parking in the agreement, parking will be free. Alternatively, the tenant has to pay for parking separately.
“In case of two separate charges – one for lease rent and one for parking charges, then parking charges could be liable to VAT as the provision of service. Parking charges for commercial premises shall also be liable to VAT at 5 percent,” mentioned Pratik Shah, partner, WTS Dhruva Consultants.