Leasing sees new light
With the recent roll-out of Goods & Services Tax (GST), many industry observers have expressed hope that this will mark the revival of the leasing industry in India. For long, lease, as a financial instrument, had not quite taken off in India despite being an empirically proven cost-effective tool for capital creation worldwide. The confusion amongst our policy makers on whether leasing involves the sale of a good or a service resulted in the imposition of multiple taxes on lease thereby virtually killing its efficacy. With the introduction of GST, we are probably heading towards a more transparent taxation regime for leasing. However, certain niggling issues still need to be addressed. But before we come to that, it is important to understand why leasing is so relevant for India.