ITFT - Leasing
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Transcript of ITFT - Leasing
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A lease is a contractual arrangement calling for the lessee (user) to pay the lessor(owner) for use of an asset.
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Features of Lease
• Generally there are two parties to a lease agreement
• Leasing is used for financing the use of fixed assets of high value. In India equipment leasing is very popular.
• The term of the lease is called the lease period. It is the period for which the lease agreement is in operation.
• Lease rentals constitute the consideration payable by the lessee as specified in the lease transaction.
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Lease vis-à-vis Buy
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Lease vis-à-vis Buy• Ownership
• Up-front costs
• Monthly payments
• End of term
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Lease Evaluation inpractice• Basic tax treatment of lease• Rates of depreciation• Depreciation allowance on
lease transactionslease transactions• Sale and leaseback
transactions
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Legal Aspects of Leasing
• As there is no separate statue for equipment leasing in India, the provisions relating to bailment in the Indian Contract Act govern equipment leasing agreements
• Since an equipment lease transaction is • Since an equipment lease transaction is regarded as a contract of bailment, the obligations of the lessor and the lessee are similar to those of the bailor and the bailee
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