[deetjohn]

Originally Posted by GTO

As other BHPians have commented, the tax gain from this hike to the kitty might not be as much. But lowering taxes on luxury goods is political suicide. How can a Mercedes become cheaper (in % terms) than a Maruti Alto??

There was another easy way to fix it! Lower the tax on Alto in percentage terms so that it beats that Mercedes.

Jokes apart, 43% tax on a Mercedes is good enough.

On top of that, there is road tax and tax on insurance to just bring the car home. And then tax on fuel, tax on parts, tax on service, toll charges to keep it running. All of this goes to the Govt. So, its not like anyone buying a car is having it easy!

Originally Posted by GTO

Whatever the reason, someone should have thought this through before. Arbitrarily changing taxes like this does no one any good. In effect, big cars have gone through 3 tax changes in as many months .

It was plain oversight!

Heck! Even BHPians had a long standing thread to debate the effect of GST on cars since Nov 2015: GST effect on car prices?

All it needed was someone from the Ministry to follow that thread to know what was to happen. Shows severe incompetence!

Its all going a bit like 'Tughlaq' as of now.

Govt. is having it easy as our industry is still growing. Sort of taking the auto industry for granted. And of course the car manufacturers are bearing it, for now. World over the auto industry is stagnant or showing negative growth. And this 'growth' wont last for long even here.

We may not have the necessary support through Public Transport to ditch cars yet. But we are getting there. Also alternate modes of transport like Uber has already made it quite possible to say no to that second or third car at home. Besides, the younger generation is also not too keen on cars like most of us over here.

So, one request to the Govt. Please don't kill the industry with this dilly dallying! After all, it supports many a families for their daily bread.

[Par_neon]

The tax that is paid on cars through GST is categorized into two basic segments- contribution to the national treasury and to make up for the cost spent on required infrastructure (roads, bridges, overheads in develeoping that infrastructure, etc). Naturally the infrastructure required by a 40L car is not 4 times that of 10L car. Hence a certain relief has to be provided on higher priced cars. That was the reason the govt. initially kept less % GST on high priced cars.
But then those in opposition of GST started a propaganda by influencing the public perception by circulating news that a mercedes is taxed more than a tractor i.e the govt cares more about the rich than the farmers, etc, etc.
This was something the Govt. hadn't anticipated, and so to rectify the perception and to hold on to a socialist tag they came back with a knee-jerk reaction of taxing all cars with the same rate again without anticipating the future. This is going to be great to conserve the vote-banks but economically this is going to hurt not just in monetary terms but also in terms of the negativistic sentiment of the foreign car manufacturers towards the Indian market.
Ideally the GST taxation of cars should be carried in terms of price slabs i.e for first 10 L 28%, next 10L something like 20%, next 30L 10% or somewhere near that.
This means that if i buy a car worth 8L, i pay 28% GST and if i buy a car worth 16L, i pay 28% GST on first 10L and 20% GST on next 6L.
This will ensure that the tax collected from a higher priced car will always be more than a lower priced car in any scenario and will also provide a relief for higher price cars from the exorbitant taxation created by same tax rates.

[Col Mehta]

Originally Posted by Par_neon

Ideally the GST taxation of cars should be carried in terms of price slabs i.e for first 10 L 28%, next 10L something like 20%, next 30L 10% or somewhere near that.
This means that if i buy a car worth 8L, i pay 28% GST and if i buy a car worth 16L, i pay 28% GST on first 10L and 20% GST on next 6L.
This will ensure that the tax collected from a higher priced car will always be more than a lower priced car in any scenario and will also provide a relief for higher price cars from the exorbitant taxation created by same tax rates.

Completely second that. And I always thought that's how it ought to be but whatever is happening is absolutely beyond me. All the taxes which we folk pay pretty much remain unaccounted for. Roads, facilities, infrastructure, services - they remain in the same dire state. Look at the current fiasco in Mumbai. BMC - one of the richest municipal bodies in all Asia and they can't fix their own drains and broken roads! (Obviously, they can't do much about floods but they haven't done anything substantial to better their roads and infrastructure). Similar situation can be seen all over. Our own hard earned money gets taken from us as tax and we see close to no return/reward. Sigh.

[Turbohead]

53% tax on cars is simply unjustified unless this very tax is used to improve our roads and public transport. There needs to be transparency in govt spending! If they demand us to show our true profits, they need to show how that's being used!

Besides, how many of you actually encourage your kids to become a politician? Becoming a politician is not encouraged in our society for some reason! I guess it's bad image! Thanks to 'that' image, we really don't have enough worthy people voted into the parliament/ legislative assemblies.

As long as the younger generation is forced away from national services, we won't be changing much at all. Sorry for going OT

[Yeldo]

Originally Posted by Par_neon

Naturally the infrastructure required by a 40L car is not 4 times that of 10L car.

I pay 40L for the features, size or brand of a car. Those benefits are provided to me by the manufacturer whom I pay. The tax on that 40L is the tax on my consumption, on my privilege to spend that 40L. Whereas the "infrastructure" we talk about is public property. Every car is entitled to same rights irrespective of its price. Just like every citizen is allowed the same rights and privileges irrespective of the tax he pays.

Originally Posted by Par_neon

Ideally the GST taxation of cars should be carried in terms of price slabs i.e for first 10 L 28%, next 10L something like 20%, next 30L 10% or somewhere near that.

Originally Posted by Col Mehta

Completely second that. And I always thought that's how it ought to be but whatever is happening is absolutely beyond me.

While it may sound fair from a literally "tax burdened" citizen's point of view - like you and I- I am afraid that such a system would not be possible for GST.

In Income Tax, when I am levied 5%, 20% and finally 30% of my income as income tax, I pay those marginal rates on the actual income I get.

But GST cannot work that way. All items within a heading/ classification has to be taxed at the same rate. A single unit of a particular good/ service can only have one GST rate. A progressive rate for a single unit of any item would mean different rates of tax for one unit of that good / service. Different tax rates on a single unit of an item would be viewed as discriminatory.

My income can be split into three brackets, but a car cannot be split thus. It is a single "unit".

If I earn 11L a year- 1L over the 10L bracket- I pay 30,000 as tax for my 11th lakh. If I earn 12L, then I pay 60,000. So I pay only for what I earn.

But when I buy a car, say, priced at 10L, I am not buying a 6L + 4L car but a single unit of a 10L car. By paying and spending 10L as a single unit. So I have to pay the consumption tax on that full 10L.

Taxation works that way.

And sorry for for not using more academically appropriate language.

[aadya]

Originally Posted by sabby_4c

Another question I always had : The Govt thinks SUV are sin goods, so why do we see all the Politicians and ministers with Fortuners etc ? Shouldn't they promote a better image with smaller cars ?

Government should ban purchase of these luxury goods (like cars of more than 4m length or with more than 1500cc engines) for any officers/department except for defence purpose.

[Col Mehta]

Originally Posted by Yeldo

Taxation works that way.

May be this is above my intelligence or may be this whole system is flawed. Whatever it is, I still can't get my head around this. But what choice do I have? As a law abiding citizen, I need to pay the taxes whether I like it or not (not because I don't want to), whether I understand it or not. And that goes for all of us. And when we, honest tax payers, see bad roads, potholes, poor infrastructure, no transparency, no facilities, basically seeing our tax money literally going down the drain, it hurts. That's all I'm saying .

And sorry for for not using more academically appropriate language.

Appreciate it, thanks!

[Yeldo]

Originally Posted by Col Mehta

And when we, honest tax payers, see bad roads, potholes, poor infrastructure, no transparency, no facilities, basically seeing our tax money literally going down the drain, it hurts.

I wholeheartedly share your exasperation on the poor quality of service often delivered by the state to honest taxpayers like you and I, Sir.

But, I wish to say three things;

One, the poor roads we see are due to prioritization in resource allocation. A certain part of government moneys goes to corruption and inefficiency. But the major issue is that there is not enough money for glass smooth roads everywhere for the kind of tax money we pay.

Two, while we complain that taxpayers are shortchanged and not getting enough developed infrastructure facilities for our tax money, we have to understand that whatever infrastructure is there is mostly benefited by these taxpaying sections themselves. Those fellow citizens who derive more benefits disproportionate to the tax they suffer, seldom gets to use these roads, highways, educational facilities or civic amenities. So in effect, we taxpayers get to use what we paid for (less the "haircuts" in form of inefficient spending and corruption, of course).

Three, when we go to buy a 10L car, we usually try to bargain and get it for,say, 5L. We expect it to deliver at least 15L worth of functionality and features. Then we complain about it not matching our expectations as if we had spent 20L.

The same process is what goes on in the elections. We expect our leaders to deliver maximum everything for minimum anything. And we complain about them not meeting or even exceeding our expectations. There is absolutely nothing wrong in this. Afterall, this is how the world moves, every democracy runs!

Sorry for being so boringly off topic!

[PatienceWins]

GST as a single tax is pointless when they are adding cess on the top of it as per their wishes. A political gimmick which has increased the price of the commonly used goods and services. And what are we getting for all the tax we pay, right from a safety pin and hair cut. If this is ache din, I just want my normal din back.

25% tax for sedans and SUV is atrocious. Salaried men are taxed on what we earn and what we spend. The only way to protest is to stop upgrading easily and make them feel the pinch.

[PatienceWins]

Originally Posted by Turbohead

Besides, how many of you actually encourage your kids to become a politician? Becoming a politician is not encouraged in our society for some reason! I guess it's bad image! Thanks to 'that' image, we really don't have enough worthy people voted into the parliament/ legislative assemblies.

As long as the younger generation is forced away from national services, we won't be changing much at all. Sorry for going OT

The good people cannot survive in the system, which is based on corruption and donations from corporates. They either become part of the system, get out or turn a blind eye without contribution. So we do not want our children to part of such a system. All of us are desperate for a solution, the reason why movements like AAP got a huge tailwind initially.

[krishnakarthik1]

Originally Posted by civic-sense

Currently the only way you could convey something to the govt is by organizing a bandh, burning down a few shops, blocking the highways etc. Those who don't do these things do not even exist for the govt.

We don't have to do any of those. All we have to do is stop buying cars till the policies are transparent, roads and infrastructure are improved.

We have to start a thread where every member who wanted to buy a new car shares the details about the cancellation of his booking or his decision to not buy a car because of the existing bad policies.

How many members do we have? How many times can we all share the thread on all our social media platforms? Lets share every post. Will our voices not be heard? Imagine.

I am ready to start by setting an example and cancelling my xta booking. Can we all do this?

[Par_neon]

Originally Posted by Yeldo

But GST cannot work that way. All items within a heading/ classification has to be taxed at the same rate. A single unit of a particular good/ service can only have one GST rate. A progressive rate for a single unit of any item would mean different rates of tax for one unit of that good / service. Different tax rates on a single unit of an item would be viewed as discriminatory.

I understand and agree that splitting tax based on price slabs is not possible under the current framework.
That why i had said ideally it should be that way, i am just proposing what i feel can be a ideal and proper solution to the entire issue.

And of course if in future the framework itself is amended to incorporate differential taxation on a single commodity based on select criteria then may be we will see something like this for various items.

[stanjohn123]

Originally Posted by Turbohead

Besides, how many of you actually encourage your kids to become a politician? Becoming a politician is not encouraged in our society for some reason! I guess it's bad image! Thanks to 'that' image, we really don't have enough worthy people voted into the parliament/ legislative assemblies.

As long as the younger generation is forced away from national services, we won't be changing much at all. Sorry for going OT

Actually I agree 100% to your views. More of the common good people need to get into the political system and Higher govt offices like IAS, district collector etc. Right now there isn't anyone with any values or proper education to think and amend laws that are needed to properly boost the economy and develop our infrastructure. All are looking only at the short term benefit of stealing money from the coffers in their 5 year tenure, the same cycle keeps continuing.

The amount of money they spend just on their election campaigns is shocking and it really infuriates me. Why are they allowed to spend so much and why aren't their expenditures transparent is beyond me.

Originally Posted by krishnakarthik1

We don't have to do any of those. All we have to do is stop buying cars till the policies are transparent, roads and infrastructure are improved.

We have to start a thread where every member who wanted to buy a new car shares the details about the cancellation of his booking or his decision to not buy a car because of the existing bad policies.

How many members do we have? How many times can we all share the thread on all our social media platforms? Lets share every post. Will our voices not be heard? Imagine.

I am ready to start by setting an example and cancelling my xta booking. Can we all do this?

Count me in and let's start a whatsapp group and FB group too. We need to voice our concerns somehow. That way manufacturers too will take heed and pressure the govt.

[Col Mehta]

Originally Posted by Yeldo

But, I wish to say three things;

Looks like we can go on for hours but I think I'll give it a pass .

[gksunil]

Originally Posted by Yeldo

we have to understand that whatever infrastructure is there is mostly benefited by these taxpaying sections themselves. Those fellow citizens who derive more benefits disproportionate to the tax they suffer, seldom gets to use these roads, highways, educational facilities or civic amenities. So in effect, we taxpayers get to use what we paid for (less the "haircuts" in form of inefficient spending and corruption, of course). about them not meeting or even exceeding our expectations. There is absolutely nothing wrong in this. Afterall, this is how the world moves, every democracy runs!

I have one doubt through; aren't the best roads in our country built on loans and then re payed through tolls? So what are we paying the road taxes for?! Only state highways?