GST on lease rental

SGST 270 views 2 replies
User Avatar

Policy Head-LAP
27 Points Joined April 2012

Hi,

I own car which was previously owned by my employer, during my job change car transfered to my name and finance by leasing co and hypotheticated with them(as per arrangement with new employer), I am paying monthly rental+GST as deduction from salary(Employer direct pay), Now I want to close lease a/c, what would be GST implications, I have couple of questions Pls help me understand:

1- is GST applicable on paying of o/s amount(full closure of balance lease rental)

2. what are GST rate for such transactions

3. if I pay GST on closure of lease rental a/c, is there any provision to take benifit in Individual a/c 

Pls share relevant circular if any.

Thanks in advance

Ramesh Mundra

0 Reply Share Follow
On 18 March 2025 at 15:10 Report
Replies (2)
User Avatar

Master in Accounts & high court Advocate
9180 Points Joined December 2011

I'd be happy to help you understand the GST implications of closing your lease account. GST Implications on Lease Closure:

1. *GST Applicability*: GST is applicable on the outstanding lease amount (full closure of balance lease rental) as it is considered a supply of service under the GST Act [1]. 

2. *GST Rate*: The GST rate applicable to lease transactions is typically 18% (CGST @ 9% + SGST @ 9%) [2]. However, this may vary depending on the specific terms of your lease agreement and the location of the lessor and lessee.

 3. *Input Tax Credit (ITC)*: As an individual, you are not eligible to claim ITC on GST paid for personal expenses, including lease rentals [3]. However, if you are using the vehicle for business purposes, you may be able to claim ITC, subject to certain conditions. R

elevant Circulars and Notifications: 1. *CBIC Circular No. 48/22/2018-GST*: Clarifies that GST is applicable on lease transactions, including the outstanding lease amount [1]. 

2. *Notification No. 11/2017-Central Tax (Rate)*: Specifies the GST rate for lease transactions [2]. Next Steps: 1. *Confirm GST Applicability*: Verify with your lessor or a tax professional that GST is applicable on the outstanding lease amount.

 2. *Calculate GST Payable*: Determine the GST payable on the outstanding lease amount based on the applicable GST rate.

 3. *Obtain a GST Invoice*: Ensure that the lessor provides a GST invoice for the lease closure, which will help you keep a record of the GST paid. Please consult a tax professional

Reply
On 18 March 2025 at 16:15
User Avatar

Policy Head-LAP
27 Points Joined April 2012

Thank you very much for your detailed opinion.

 

Thanks

Reply
On 18 March 2025 at 16:19


CCI Pro

Leave a Reply

Post Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Recent Threads

More recent discussions | Post

Related Threads
Loading