Hire Purchase-CST and TDS

[Binu Karuthedath]

Dear Sir

one registered manufacturer with KERALA VAT , they have to decided the hire purchase of the laser printing machines from Maharastra . They also MH VAT dealer . Can we show this item in KVAT ?and can we issue C Form for the same? . What is the accounting effects in dealer Books .is this transaction is TDS applicable as per IT .

[Ganeshan Kalyani]

Sir, I understand from your query that you are intending to purchase on lease basis the printer from Maharashtra VAT dealer. Also you have Maharashtra VAT registration. Can this transaction be shown in your Kerala Books. This is your query. Please correct if it is incorrect.

My view: you (being Kerala dealer / manufacturer can purchase the printer on lease basis from Maharashtra dealer against Form C. CST@2% shall be levied on the invoice. Since this is on lease basis every month or after a particular time period as per your agreement the lease rental would be charged on you. Thus TDS shall also have to be deducted. Thanks.

AI Summary

Interstate hire purchase VAT/CST treatment: concessional Form C applicable and lease rentals require TDS withholding.
Interstate hire purchase/lease of a laser printing machine from a Maharashtra dealer to a Kerala registered manufacturer may be shown in Kerala books and supported by Form C; the transaction attracts Central Sales Tax on the invoice, and periodic lease rentals under the agreement will be subject to Tax Deduction at Source, requiring appropriate accounting for rental payments and receipts.