Equipment Leasing Under SAC Code 997114

Equipment leasing services cover arrangements where a business gives machines, vehicles or other equipment to customers for agreed rentals instead of selling the assets outright. The lessee uses the equipment in its operations and pays rental instalments as per the lease contract. Under GST, such equipment leasing and finance lease services are classified under SAC 997114. This SAC code and its GST treatment decide how GST applies on lease rentals and related charges.

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997114 SAC Code GST Rate

Review old and new GST rates for Equipment Leasing under 997114 SAC Code.

Equipment leasing, miscellaneous financial and investment banking services under these codes are treated as financial services under GST. The taxable part is mainly fee based income, rentals and advisory charges collected from customers, while interest like elements may have separate treatment.

After the September 2025 rationalisation, taxable financial service charges that are not specifically exempt are generally kept in the 18 % slab with input tax credit for registered recipients. Banks, leasing companies and investment banks therefore need to separate taxable fees and rentals from exempt interest components and apply GST only on the taxable portion.

The table below explains the prevailing GST treatment for SAC code 997114, highlighting the standard 18 % rate on taxable financial service charges.

SAC Code

997114

Description

Financial leasing services

New Rate

18 %
Standard

Old Rate

18 %

Notes

Financial leasing services (for example, equipment leasing with finance element) are treated as taxable financial services at 18% with ITC in most rate references. The 56th Council’s rationalisation does not announce a separate reduced slab for this SAC, so the rate remains at 18% with ITC.

Financial institutions using this SAC code should clearly show processing fees, advisory charges or lease rentals on invoices, mention the GST rate in % and tax amount and reflect the same classification in GSTR 1 and GSTR 3B. This helps customers claim input tax credit correctly on eligible charges and keeps GST scrutiny smoother for both sides.

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Practical Classification Guidance

Banks, NBFCs, insurers and intermediaries should map each product to the correct SAC, checking whether the income is fee based and taxable or interest or risk cover that may have special treatment. Proper SAC selection and correct GST rate application in % reduce disputes, help customers claim input tax credit on eligible charges and keep GST returns easier to justify during audits.

Conclusion

Equipment leasing services under SAC 997114 cover rental based use of machinery, vehicles and other assets. The GST focus is on taxable lease rentals and service charges, which generally attract 18 % with input tax credit for business users, while any interest like finance component may have separate treatment. Leasing companies should define rentals and charges clearly, apply the correct GST rate in %, mention SAC 997114 on invoices and keep matching treatment in GST returns so that clients can manage input tax credit smoothly.

Frequently Asked Questions

Clear answers to common queries about SAC Code 997114 and GST compliance.

What does SAC code 997114 cover in GST?

SAC 997114 covers financial leasing services where the lessor provides equipment, vehicles or machinery to a lessee for a long period, often with an option to purchase. It is similar to a financed asset purchase spread over time, with periodic payments from the customer.

Does SAC 997114 include financial leasing of equipment, vehicles and machinery?

Yes. Lease arrangements where the risk and reward of ownership largely pass to the user and payments include a finance component fall under SAC 997114. This is different from simple operating leases or rentals, which may be classified under separate SAC codes for renting of goods.

What GST rate applies to equipment leasing services under SAC 997114?

Financial leasing services are generally taxable at 18% on the service portion or on the total lease consideration as per GST valuation rules. The structure can be complex because part of the payment represents interest. Specific GST circulars and rules guide how to compute taxable value for leases.

How is GST calculated on EMIs for leases classified under SAC 997114?

For financial leases, GST is usually calculated on the taxable value of the service portion in each instalment, often including interest as part of the value. The exact method depends on the lease structure, and lenders follow GST rules to decide how much of each EMI is taxable.

Can lessees claim ITC on GST paid for SAC 997114 leases used for business purposes?

Where leased equipment or vehicles are used for taxable business activities, lessees can normally claim ITC on the GST charged on lease instalments, subject to blocked credit rules for certain motor vehicles. Proper lease invoices and clear linkage to business use are important to support ITC claims.

Important Disclaimer

The above does not constitute professional advice or a formal recommendation. We recommend consulting a professional tax consultant before acting on the information contained in this piece of content.