Effective rate applicable, Service Tax

[Bashiruddin shaikh]

Service Tax liability under the category of Banking and other financial service for hire purchase agreement of an equipment. Principal amount - Rs.200000.00 Monthly Interest amount - Rs. 10000.00 Service tax payable on the above as per effective rate vide Notification No. 4/2006 ST dated 01.03.06

Posts / Replies

[Markesh Antony]

Exemption from service tax has been provided to financial leasing services including equipment leasing and hire-purchase, both for principal and interest portion of the installments paid. The amount of interest is calculated as 90% of the difference between the installment paid towards the payment of the lease amount and the principal amount in such installment. (Notification No.4/2006 -Service Tax dated 1.3.2006)