[yrwagh]

No wonder TOYOTA VP made a scathing remark on government taxation last year that we are not selling drugs here in India !

[Turbanator]

Originally Posted by Totoro11

Most Sales persons casually brush off the TCS component as saying that it is refundable. Is that really so?
Assuming a person buying a 15-20L car will be having enough income to fall into the top tax bracket, this amount is as good as gone.

TCS is deposited in the buyer's account, so depending on the Tax bracket, one can either get this amount adjusted with dues or get a refund. It's fully adjustable so it's not a cost and refunds should happen automatically if you file the returns.

[CosmicWizard]

Originally Posted by Turbanator

Like, a 10 Lac Discount on that swanky German car is a combination of the Dealer/ manufacturer discount and the savings on GST

Can you pls elaborate a bit more on this? I could never understand how can BMW in India offer these 7-8L discounts on a 50-60L car without making a loss? If you do the math for ex-show price and subtract (GST+import duty) difference wrt US, the price comes out similar to what they sell in the US. So where is this almost $10K discount coming from? Such large discounts are unheard of in US markets which means the margins aren't really that big, even with much larger volumes. And I doubt they can do anything about GST+import duty component, so where are the big discounts coming from?

[Turbanator]

Originally Posted by CosmicWizard

Can you pls elaborate a bit more on this? I could never understand how can BMW in India offer these 7-8L discounts on a 50-60L car without making a loss? If you do the math for ex-show price and subtract (GST+import duty) difference wrt US, the price comes out similar to what they sell in the US. So where is this almost $10K discount coming from?

To begin with, most Premium manufacturers price the cars factoring in the discounts after the initial launch euphoria is settled. It works well for them and the dealers as some models continue to be in demand so the higher prices become sort of norm, as for example X5. We bought one in March 2020 with around 15 Lac discounts and in later months it reduced to almost nothing as demand outstripped the availability but they kept the same MRP. If they had launched at lower MRP, people would have felt bad if they increased the MRP

Let's talk about another model, E-Class, which regularly is discounted at over 10 Lac here, so the Ex-showroom price which say is 60 lac becomes 50 lac for the buyer. Since 50% GST was included in 60 Lac MRP, the dealer would have paid 20 Lac GST, i.e the base value of the car would be 40 lac. Now at 50 Lac net after discount, the basic value on which GST will be applicable is reduced to 33,33 Lac. So the net discount that Dealer has to actually factor is 6,67 Lac only (40-33,33).

GST is first charged by the manufacturer who will always consider this discounting and bill to the dealer at predefined rates giving the dealer flexibility to operate in the market within their margins. Any additional schemes launched later after the car is invoiced is taken care of by suitable credit notes. This is perfectly fine and nothing wrong.

Custom duties are never adjustable so irrespective of the price manufacturer sells, these are charged at the CIF value at the time goods are cleared at the port.

[carthick1000]

Originally Posted by Turbanator

Road tax is charged for life time (15 Years) and can carry from 6-20 % of the Ex-Showroom costs.

In most Western European countries, the road tax is paid based on the ownership period of the car and as soon the car is transferred to a new owner, then the new owner gets the road tax invoice from tax authorities. Considering Indian situation, the new car buyer not only has to face a steep depreciation, but also he has to pay the life time road tax

Hope the used car prices reflect that.

Originally Posted by Turbanator

Like, a 10 Lac Discount on that swanky German car is a combination of the Dealer/ manufacturer discount and the savings on GST

This is also strange given only I see relatively high discounts being offered on only luxury brands in India. Instead of saying it as a discount, the dealers are transferring their input tax credits/benefits to the consumer to sell the car. In the Netherlands, this also happens sometimes (Literally translated from Dutch : 'VAT free sale days'). But these high discounts are not only limited to Luxury brands, but almost every other car brand give higher discounts on these VAT free sale days. Mostly for obvious reasons like to get rid of stock / make room for new models facelifts / targets etc.

[Turbanator]

OT:|

Originally Posted by carthick1000

In most Western European countries, the road tax is paid based on the ownership period of the car and as soon the car is transferred to a new owner.

Yes, like in Canada, we pay Yearly charges for registration plus a onetime charge number plate which you can simply transfer to the new car. They transfer automatically the rest of the validity on that plate. You pay just for the documentation to registry.

Hope the used car prices reflect that.

Yes, usually.

I see relatively high discounts being offered on only luxury brands in India.

Correct, regular brands cannot afford to price higher, instead, they will do price increases and also dealer margins are usually in some reasonable range. Periodically, some models may see a clearance.

The dealers are transferring their input tax credits/benefits to the consumer to sell the car.

No, it's not like that. The example, I gave you before, say considering an average expected pre-GST market price of E-Class as 33Lac, MB India would have invoiced the dealer to the dealer at 30 Lac or so and deposited GST on 30 Lac to the Government. Say, MB Dealer will invoice this to the customer at 33 Lac + GST, so the dealer will pay GST only on the difference to the Government. (33 -30 on 3 Lac). Similarly, if due to any reasons, the dealer has to sell at lower rates, he will get a credit note with GST, so MB India will adjust the excess paid to Government in the next GST payment.

In the Netherlands, this also happens sometimes (Literally translated from Dutch : 'VAT free sale days'

Yes, so, it's just another way of giving discounts. Instead of showing 10 or 20 %discounts, they simply say VAT free sales. But they still have to make an invoice and charge VAT and deposit/ adjust in the government VAT account.

[vjbox]

Originally Posted by DHARM

A Company can claim depreciation on the car over the life of asset, thus it can benefit whereas Individual Buyer cannt

Yes you are talking about depreciation. I was talking about Input Tax credit for GST.

[Turbanator]

Originally Posted by vjbox

Yes you are talking about depreciation. I was talking about Input Tax credit for GST.

Not available, it’s under negative list. So corporates will book the full amount (GST paid) and claim depreciation.

They also stopped inputs on repairs in 2019.

https://www.team-bhp.com/forum/india...ce-repair.html (GST: No more input tax credit on automotive invoices (purchase, insurance, service, repair))

[Karvel]

Originally Posted by Turbanator

Not available, it’s under negative list. So corporates will book the full amount (GST paid) and claim depreciation.

They also stopped inputs on repairs in 2019.

https://www.team-bhp.com/forum/india...ce-repair.html (GST: No more input tax credit on automotive invoices (purchase, insurance, service, repair))

Yes, so ineffect, instead of getting all credit upfront, it gets deduced from profit as depreciation.

[Turbanator]

Originally Posted by Karvel

Yes, so ineffect, instead of getting all credit upfront, it gets deduced from profit as depreciation.

Depreciation is on the value of the complete car and not just on the GST portion, just for clarity

[vjbox]

Originally Posted by Turbanator

Not available, it’s under negative list. So corporates will book the full amount (GST paid) and claim depreciation.

They also stopped inputs on repairs in 2019.

https://www.team-bhp.com/forum/india...ce-repair.html (GST: No more input tax credit on automotive invoices (purchase, insurance, service, repair))

Right- thats what I said above. We too only claim depreciation on our company vehicles.

[aerohit]

https://www.youtube.com/watch?v=Tsq8h80SX5U&t=743s

I wanted to share this little video for awareness purpose. This is one reason for me not to replace my car.

I dont need to comment any further, the comments are in the video comments section....

[sany0023]

I had requested for detailed break-up of Tata Altroz DCA from Tata motors dealer. He sent this quotation.
They are charging more cess right? (at 3%). It should be (1%) for sub 4m petrol cars. Can I raise this issue to them?
But ex-showroom they have adjusted for what is released by tata officially..
Is it different for automatic cars? Please suggest.

[R_D_S_7]

Recently I bought Tata Safari Red Dark Edition earlier. One thing i noticed is the split up of exshowroom process and taxes in the final bill. As per government guidelines, a vehicle fulfilling below criteria should be charged 28%GST+22%Cess. However, my invoice is having split up of 28%GST and 20% CESS, means safari is not meeting one of the criteria

1. Diesel car- safari only comes with diesel - fulfills the criteria
2. Engine capacity of more than 1,500cc - specifications mention as 1956 cc- fulfills the criteria
3. length of over 4,000mm - specification mention length as 4661mm - fulfills the criteria
4. ground clearance of 200mm and above - I could not find this information anywhere officially fro. Tata motors, third party sites mention 205mm - not sure

My question is, if Tata motors charging only 48% as GST +Cess, instead of 50%, means safari is not fulfilling one of the criteria. From the above analysis, only ground clearance is not officially mentioned, that means safari has less ground clearance<200mm, if so, are we getting cheated in the name of big SUV, is it industry norm, what about XUV700, could someone clarify. Thanks.

[thanixravindran]

Originally Posted by R_D_S_7

My question is, if Tata motors charging only 48% as GST +Cess, instead of 50%, means safari is not fulfilling one of the criteria. From the above analysis, only ground clearance is not officially mentioned, that means safari has less ground clearance<200mm, if so, are we getting cheated in the name of big SUV, is it industry norm, what about XUV700, could someone clarify. Thanks.

I believe it is the way ground clearance is measured as per government calculation for taxation - it is the lowest part in vehicle and ground. Another manufacturer simply put non functional a plastic part to comply with government rules and managed to position the product at 2% less prices. In reality, there is no impact to ground clearance. So may be Tata also did it. I don't know.

If government forms irrational rules, businesses come up with ingenious solutions