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NEW DELHI: Leasing of vehicles purchased prior to July 1 will attract a tax equivalent to 65 per cent of the current applicable GST rate for a period of 3 years, the government said today.
"Leasing of vehicles purchased and leased prior to July 1, 2017, would attract GST at a rate equal to 65 per cent of the applicable GST rate (including Compensation Cess)," the finance ministry said in a statement.
If you lease a car, you can generally claim a GST credit for each lease instalment amounts paid in each period which included GST. At the end of the lease, you may have to pay a residual payment to take ownership of the car.
Generally, when you lease a specified motor vehicle from a business (that is a GST/HST registrant), you are required to pay the GST/HST on your lease payments. If you trade a used vehicle for full or partial payment for a lease, the GST/HST treatment depends on if you have to charge tax on the trade-in.
Any down payment you provide will lower your monthly lease payment. In most states, you will be charged sales tax on any down payment you provide. Just as in a regular car purchase, you will have to pay the dealer and state licensing fees. Dealer documentation fees can range between $50 and $695.
Leasing a car If you lease a car, you may be entitled to claim a GST credit for the GST included in each lease payment, based on the amount you use the car in carrying on your business. The amount of GST credit you can claim for GST included in the lease payments is not limited to one-eleventh of the car limit.
If you lease a car, you can generally claim a GST credit for each lease instalment amounts paid in each period which included GST.
Paying GST on lease agreements Generally, lease agreements are subject to GST. ... That is, you treat each payment as though you are making a separate purchase each tax period, even though each payment is for the same goods under the same lease agreement.
When you lease a car, in most states, you do not pay sales tax on the price or value of the car. Instead, sales tax will be added to each monthly lease payment.
GST on cars in India is applicable across multiple slab rates of 5%, 12%, 18% and 28%. ... However, GST is not the only tax applicable to motor vehicle sales, as a compensation cess of up to 22% may be levied on cars in addition to the 28% GST that is applicable.
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