« Top Headlines » Open DEMAT Account in 24 hrs  Mock Test Papers Series - I & II for Students appearing in CA Foundation January 2027 Examination.  Income Tax Rules 2026: CBDT Introduces Revised Form 161 for Penalty Waiver, Clarifies Misreporting Categories and Taxpayer Relief  ITR Filing and Income Tax Audit Deadline Extended: 5 Critical Things Taxpayers Must Know  Filing Belated ITR for AY 2026-27? Know Which Losses You Can Carry Forward and Which You May Lose  CBDT Extends Tax Audit Report Deadline to October 21, ITR Filing Last Date to November 21 for AY 2026-27  CBDT Extends AY 2026-27 ITR Filing Deadline for Tax-Audit Cases: New Dates and Key Compliance Details  Foreign Assets Missing From Your ITR? Income Tax Department Opens One-Time Disclosure Window  Tax Audit Deadline September 30: Why AIS, TDS and GST Figures May Not Match Your ITR and What Taxpayers Should Do  Tax audit deadline September 30: Common mistakes taxpayers should avoid  Your ITR says ‘verified’, but the refund hasn’t arrived? 5 reasons why your money could be stuck  Missed the ITR Deadline but TDS Refund Is Due? Here’s How You Can Still Claim Your Money «  MFs lose 20% in assets as firms pay advance tax... Claim tax relief on overseas losses... » Hire purchase financing out of service tax net July, 04th 2007 There is good news on the tax front for hire purchase financiers. The Customs, Excise and Service Tax Appellate Tribunal in a recent ruling said that hire purchase financing is not a taxable service. The tribunal took this view in case of Bajaj Auto Finance. It distinguished a hire purchase arrangement from a hire purchase finance arrangement for taxation purpose. The tribunal held that fundamentally, in case of hire purchase arrangement, the title to the goods remains with the hire purchase company whereas in case of hire purchase financing arrangement, the title to the goods remains with the hirer. It observed that a hire purchase arrangement must be distinguished from a hire purchase financing arrangement wherein a customer enters into an arrangement with a view to financing his purchase which is in the form of hire purchase agreement with the financier, but actually amounts to a loan transaction. The tribunal held that since the category of Banking and Other Financial Services (which is a taxable service) covers hire purchase and not hire purchase financing, the same cannot be covered under this category. But there are apprehensions that the government would issue a notification to tax hire purchase finance transactions too. Given the past experience, one would expect that the government would effect amendments to tax hire purchase finance transactions, but hopefully not retrospectively, said Prashant Deshpande, executive director, PwC. Hire Purchase transactions have been bought under service tax net from July 16, 2001. Since then, there have been a lot of issues with regard to levy of service tax on these services. Consequently, the government issued various clarifications on these issues. For instance, a circular issued in July 2001 stated that there would be no service tax on the principal amount charged by the hirer whereas interest and lease management fee/processing fee/documentation charges would attract service tax. Subsequently, a March 2006 notification provided an exemption up to 90% of the interest amount from the payment of service tax. A lot of financing firms in equipment leasing and hire purchase financing would benefit from the tribunals interpretation, although there are fears that the government would prevail over this through a new notification.