hire purchase transaction - gst

[Richa Goyal]

How do we charge gst and raise invoices on a hire purchase transaction?

And what should be the value of a machine which is sent under a hire purchase transaction in the EWAY bill.

Regards

Richa Goyal

[KASTURI SETHI]

FAQ

Q18. Whether goods supplied on hire purchase basis will be treated as supply of goods or supply of services? Why?

Ans. Supply of goods on hire purchase shall be treated as supply of goods as there is transfer of title, albeit at a future date.

In my view, transaction value (whatever charged or to be charged) of the goods should be mentioned on invoice. Invoice is to be raised as usual.

[Richa Goyal]

Thank you for your advice

[YAGAY and SUN]

Under a hire purchase transaction, ownership of the goods will pass on to the buyer on payment of last installment. Hence, GST is applicable on hire purchase transaction as its covered under entry 1 (c) of Schedule II of CGST Act.

AI Summary

Supply of goods on hire purchase: GST applies and invoice/Eway must state the goods' transaction value.
Under a hire purchase contract the eventual transfer of title means the arrangement is treated as a supply of goods for GST; GST applies and the supply should be classified accordingly. A tax invoice must be raised showing the transaction value (the amount charged or to be charged for the goods), and the eway bill should record the machine's value as that transaction value.