service tax on operating lease of auto rickshaws

[Satbir singh wahi]

NBFC WANTS TO LEASE OUT AUTO RICKSHAWS AS OPERATING LEASE. WHETHER THERE IS SERVICE TAX ON INTEREST PAYMENTS.  BUT ON HYPOTHECATION OF ASSETS , INTEREST INCOME , NO SERVICE TAX IS PAID BY BANKS. PLEASE CLARIFY. 

[ALOK GUPTA]

Your question is not supported by full facts & figures. Interest payment is out of ambit of service tax. How does hypothecation of assests & interest income come into picture. What is the nexus between NBFC & banks? Whether you compare the service rendered by an NBFC & a Bank? Which amount, to come under tax purview, is being sought for?

[Views expressed are individual in nature]

[Satbir singh wahi]

NBFC WANTS TO LEASE OUT AUTO RICKSHAWS AS OPERATING LEASE. WHETHER THERE IS SERVICE TAX ON INTEREST INCOME EARNED ON OPERATING LEASE OF AUTORICKSHAWS.

[Vijay Chitte]

As per Notification 04/2006-ST, w.e.f. 01.03.2006 service tax will be payable only on 10% of Interest plus management fees / Documentation charges/ processing fees in case of hire purchase and leasing.

Service Tax is not leviable in case of OPERATING lease.

 

 

AI Summary

Service tax on operating leases: interest income from operating vehicle leases is generally not taxable, unlike hire purchase.
The query concerns whether an NBFC must pay service tax on interest income from operating leases of auto rickshaws. The discussion distinguishes operating leases-which are indicated as not leviable to service tax-from hire purchase and leasing arrangements, for which notified provisions render a limited component of interest plus ancillary fees (management, documentation, processing) taxable.