CA S K Mishra, FCA, FCMA , MBA
Quick Summary
A lease is a contractual arrangement between owner (lessor) user (lessee) whereby one party, the lessor, grants the right to use a particular assets (such as a parcel of land, building, equipment, or machinery etc.) for a specific period and under specified conditions to the other party, the lessee
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FAQ :
A lease is a contract where one party (lessor) grants another party (lessee) the right to use an asset for a specific period under certain conditions, in exchange for payment.
GST does not differentiate between finance and operating leases. The classification as a supply of goods or services depends on whether the lease agreement includes the transfer of title.
If the lease agreement stipulates the transfer of title, it's considered a supply of goods. If it does not stipulate the transfer of title, it's considered a supply of services.
Yes, several exemptions exist, including long-term leases (30 years or more) for industrial plots, residential apartments, and land used for cultivation. Renting of residential dwellings to unregistered persons by registered persons is also exempted.
Yes, GST paid on lease rent is generally eligible for Input Tax Credit (ITC), as it is not listed under the blocked credits as per Section 17(5) of the CGST Act.
Renting or leasing of vacant land by any person for commercial purposes (not covered by specific exemptions) is subject to 18% GST under the forward charge mechanism.
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