Leasing

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Leasing

  1. 1. A lease is a contractual arrangement calling for the lessee (user) to pay the lessor (owner) for use of an asset.
  2. 2. • 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.
  3. 3. • Ownership • Up-front costs • Monthly payments • End of term
  4. 4. • Basic tax treatment of lease • Rates of depreciation • Depreciation allowance on lease transactions • Sale and leaseback transactions
  5. 5. 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 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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