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  1. Daksh
  2. Finance, Insurance
  3. Monday, June 19 2017
I purchased new HONDA CITY in 2016 under lease rental option from Noida. The VAT paid was 5%.

Now under GST, what impact would be there. Some information received from rental company that it would be increased 43%. It seems huge as my EMI is getting changed from 35K to 50K.

Pl suggest way out.
Admin Accepted Answer
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Hello,

The VAT Duty is already been paid by the leasing company at the time of Buying Car
Under leasing - The same VAT Duty is included as part of ex-showroom price and in monthly Lease Rentals - the VAT Duty is charged in, so that customer do not pay in excess amount

Under Leasing - if the customer makes higher up Taxes as part of GST - this will be like higher taxation, either to profit to Government or the Leasing company. Am sure - this wont be case as this will terminate in most of the leasing contracts from the lessee side.

Will suggest to await till July 2017 - as there is less clarity on the issue on the final imposition of GST under such cases, where tax already been paid and tax credits are applicable based on monthly payments in Lease.

GST is not supposed to make higher income for the Government on the tax already paid
Let be wait in July 2017 to have better clarity or connect with a GST Expert / CA - who can guide you on same.


  1. more than a month ago
  2. Finance, Insurance
  3. # 1
lakshmikanth Accepted Answer
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Leasing company has communicated and the GST shall be 43 % , which earlier was VAT 14.5 %


Impact = 20 k + VAT 14.5 % = 22.9 K

Now = 20 K + GST 43 %= 28.6 K

additional of 5.9 K monthly

But will this also be non taxable right.?
  1. more than a month ago
  2. Finance, Insurance
  3. # 2
Harshal Accepted Answer
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The issue just doesnt ends there.
GST will be charged @ 43% even on the Residual value of the car post completion of lease.
Which will be significantly on the higher side.

It's just unfair and injustice that is happening on the people who has taken car lease pre-GST.

Also there was representation that was supposed to happen on 18th june about the same, but no news of it as of now.
  1. more than a month ago
  2. Finance, Insurance
  3. # 3
Nipun Bansal Accepted Answer
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Under prevailing tax regime (i.e. pre GST), lease rentals are subject to VAT at the applicable rate which varies between 12.5% and 20% basis respective State laws.
Under GST regime, lease rental will be subject to GST at the rate of 28% plus Compensation Cess which varies between 1% and 15% depending upon parameters as mentioned in table below:

Category of Cars Criteria/ combination GST Compensation Cess Effective GST
Petrol Length less than 4 M and Engine CC less than 1200 28% 1% 29%
Diesel Length less than 4 M and Engine CC less than 1500 28% 3% 31%
Any other cars NA 28% 15% 43%

Hence if you are paying currently a VAT of 14 % on your EMI this will increase to 43% (28%+15%) and at the end of the lease , a GST of 43% against 14% earlier will also be charged on the Residual value you pay to the CAR lease Finance company. So nut shell your cost of ownership goes up 29% on the balance EMI's + RV.
  1. more than a month ago
  2. Finance, Insurance
  3. # 4
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What is govt trying to do, they have made life hell, my net value to pay to car company has increased to 2.5 lakh


  1. more than a month ago
  2. Finance, Insurance
  3. # 5
Puneet Accepted Answer
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I leased a car valued 9,54,000 with a monthly emi of Rs 24250. As per the GST, I would have to bear the extra burden of 6K per month..forget RV now as I am yet to come out of the shock. What kind of taxation is this?
  1. more than a month ago
  2. Finance, Insurance
  3. # 6
KR Accepted Answer
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this is ridiculous, definitely it defeats purpose of car lease. is there any form of representation to voice out concerns to finance minister
  1. more than a month ago
  2. Finance, Insurance
  3. # 7
Shailesh Accepted Answer
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There is already a petition to Finance Ministry

https://www.change.org/p/finance-ministry-gst-impact-on-existing-car-lease
  1. more than a month ago
  2. Finance, Insurance
  3. # 8
GKG Accepted Answer
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It seems that the response from government to the representation by lease industry is to wait as the current priority is to roll out the GST on 1st July. As of now confusion prevails.

Foreclosure does not make sense for those into leased car for six months to one year or so. Retaining means a very high cost of ownership.
  1. more than a month ago
  2. Finance, Insurance
  3. # 9
Nagaraju Accepted Answer
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We cannot afford this increase in EMI as the intention of car lease itself is lost. I hope the tax authorities understands the sprit of GST and come with modified rates. There should not be any increasing in net tax rates due to GST.
  1. more than a month ago
  2. Finance, Insurance
  3. # 10
prasad Accepted Answer
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Hell with this GST and government
  1. more than a month ago
  2. Finance, Insurance
  3. # 11
prasad Accepted Answer
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look at the exact figures. This government ruining our life :(
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  1. more than a month ago
  2. Finance, Insurance
  3. # 12
Bhawani Accepted Answer
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Badly impacting our financial planning. What the hell this is done? 5k per month increase in emi?
  1. more than a month ago
  2. Finance, Insurance
  3. # 13
sureshkumar Accepted Answer
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i have a car on lease emi is 25K, i think we must have wait till the final implication.
  1. more than a month ago
  2. Finance, Insurance
  3. # 14
Lokesh Accepted Answer
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This government is always in rush without formulating the guidelines. For new car buyers the amoun is doubled. There is no option to even come out. This is stupidity.
  1. more than a month ago
  2. Finance, Insurance
  3. # 15
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