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Dvat on finance lease

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atul

DGM

39 Points Posted on 31 July 2013

Our company is planning to give machinery on Finace Lease. The structure is that - Original Cost of Machine is Rs. 10 Lacs; Lease period 36 Months; Lease Rental 30232/- per month (consiting Principal & Interest part); Residual Value Rs. 2 Lacs. My question is:

1. Whether on this transaction DVAT is payable.

2. If yes, whether DVAT is payable at the time of inception of lease on total amount of lease inc. residual value i.e 30232 X 36 Month plus 2 Lacs =1288352/- and to be deposited immediately.

3. If answer to 2 in negative, then whether DVAT is payable on monthly installement of Rs. 30232/- and will be payable montly/ quarterly with the Goverment.

Please clarify on URGENT basis.

Thanks in advance

Replies (1)

MJ Krishnamurthy

ACCT(Retd)

5757 Points Posted on 02 August 2013

DVAT is payable on the monthly rentals received by you. This is another form of sale called as transferof right to use. On the residual value also you have to charge VAT.Generally, the last bill on residual value is issued to some person other than the lessee.Of-course,that sale can be retransferred to the lessee on paper..........mjk