TaxTMI 
TaxTMI 
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.
service tax on operating lease of auto rickshaws
02 Jun 2012 
4 Replies 
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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. (AI Summary)
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. (AI Summary)