[SomrajSG]

So a used car dealer who makes 100 Rs from a car sale, will pay 15.26 as GST then almost Rs 30 (on a net profit of 84) as Income tax then.

Wah!!

I have NO issues paying 45% of my income as taxes, but the question is, what I am getting against that?

[sukarsan]

Thanks to all for clarification. Title is click baity. Request mods to revise title of post to-GST for profit derived from used car sales(spinny etc) increased from 12% to 18%.

[DRPSREDDY]

Or better we should modify the title as follows:

GST on profit by used car dealers increased from 12% to 18%

This should be more appropriate.

Originally Posted by FrozeninTime

Increase in GST for used cars is to disincentivise purchase of old and used cars so that government meets it's zero carbon target of 2070. It's going drive cost of used cars up.

So will the used car prices come down or go up. As it is the used car dealers inflate prices so high that it makes it unfeasible to buy it. Secondly, we don't know what tapering have they done with the cars to think the reading is genuine.

I was going through some videos of dealers in Chandigarh and NCR regions. The price they quote is close to the prices quoted by dealers here in Hyderabad. If I buy it from them pay taxes here, it is expensive than buying here. For example I was looking a Fortuner a 2022 example. The quoted proce for a 4x2 model with 40k odo is 32 lakhs. If I pay a tax of 6 lakhs here in Hyderabad RTO it comes to nearly 40 Lakhs including all expenses. I am getting a brand new one if I pay another 5 lakhs. When I spend so much for a 2 years old, what is the point in buying a used car? Similar is the prices for other luxury cars too.

[ZenMaster]

This is going to affect the likes of True Value and other OEM supported Used Car sellers from where a lot of people buy their cars.

These outlets already charge a premium for their apparent "trust worthiness" and OEM backing which a lot of people are willing to pay to avoid the hassle and risk when buying from other shady dealers.

This will make it even more costly.

[saikishor]

Does this simply mean that dealer used cars will now be priced higher for the dealers to make comfortable margins?

I mean, cars from used biggies like spinny are already overpriced.

[Hayek]

This is a classic GST - on the value added by the dealer. Don’t see it as a big deal - GST on most goods and services is 18%, don’t see why used car dealers should be taxed at a lower rate. The cost will be borne by a mix of buyers and sellers of used cars - not by the dealers. And dealers will pay income tax on their PBT - which is after all other establishment costs they incur - not on the gross margin

[TSI_Exhaust]

This should cause businesses like Spinny, Cars24 etc. to hike the prices of used cars so that they are able to maintain their margins. The overhead will be passed on to the common man.

Dealers already charge premium prices. The used car market isn't what it used to be like.

And, in light of the above point, it may become debatable whether buying a 2-3 old car vs a new car makes any sense any more. Might as well pay a bit more a get a new one instead. (may be this is what the government actually wants?)

Originally Posted by FrozeninTime

Increase in GST for used cars is to disincentivise purchase of old and used cars so that government meets it's zero carbon target of 2070. It's going drive cost of used cars up.

If the above is true then it is frankly insane.

How about starting with giving a hard deadline for diesel vehicle purchase?

How about starting with giving a hard deadline for E20/E30 fuel availability as opposed to the current majority of E12/13 fuel?

How about improving EV infra at a faster pace?

[sukhbirST]

People will start using more cash component in sales. We Indians are smart to bypass rules like these.

[kgt.v8]

Originally Posted by saikishor

Does this simply mean that dealer used cara will now be priced higher for the dealers to make comfortable margins?

Originally Posted by TSI_Exhaust

This should cause businesses like Spinny, Cars24 etc. to hike the prices of used cars so that they are able to maintain their margins. The overhead will be passed on to the common man.

All the big used car dealers are going to add this increase in GST to the car price such that the buyer will have to bear major part this additional tax burden.
I already got a message from Spinny that used car prices are going up by 2% - 5% next year. This is the first time I have seen this message since I registered on their platforms last year.


Below is hypothetical calculation of how the buyer may suffer due to this

• Dealer buys the car from customer at : ₹2,00,000
• Dealer sells the car to buyer at : ₹2,50,000
• GST payable by dealer : ₹250000 - ₹200000 = 50000 * 0.18 = ₹9,000
• New selling price after GST increase : ₹260000 (increase by ₹10k. Who could imagine paying for a car more next year instead of paying lesser as previous price was not known)
• GST payable on new selling price : ₹60000 * 0.18 = ₹10,400 (All amount is passed onto the buyer)

Originally Posted by TSI_Exhaust

How about starting with giving a hard deadline for diesel vehicle purchase?
How about starting with giving a hard deadline for E20/E30 fuel availability as opposed to the current majority of E12/13 fuel?
How about improving EV infra at a faster pace?

All of these are right questions, and the government has to provide this clarity. You cannot keep milking the common in the name of taxes and not give a proper infrastructure in return for them to survive and thrive.

The only comment I can expect from GST council is that these questions do not fall under their scope. GST is generating taxes, so from my perspective GST council is also accountable to how these taxes are used.

[PB65]

Originally Posted by sukhbirST

People will start using more cash component in sales. We Indians are smart to bypass rules like these.

This perhaps will be the most probable outcome of this new taxation. Goes both ways, saves the GST component, and projects the dealer in the lower income slab, thus saving the ITR.

Although, these organised players will be keen on taking advantage of the hike in taxes to increase the prices of the vehicle by a considerable amount. This leads us to benefit number 3 for the dealer, "Hume tax bhi dena hai bhai, to gaadi mehngi hai."

But then again, as a buyer, I can always use cash payment as the ultimate bargain to get down the price.

[DRPSREDDY]

Originally Posted by ZenMaster

This is going to affect the likes of True Value and other OEM supported Used Car sellers from where a lot of people buy their cars.

These outlets already charge a premium for their apparent "trust worthiness" and OEM backing which a lot of people are willing to pay to avoid the hassle and risk when buying from other shady dealers.

This will make it even more costly.

Originally Posted by saikishor

Does this simply mean that dealer used cara will now be priced higher for the dealers to make comfortable margins?

I mean, cars from used biggies like spinny are already overpriced.

Originally Posted by kgt.v8

All the big used car dealers are going to add this increase in GST to the car price such that the buyer will have to bear major part this additional tax burden.
I already got a message from Spinny that used car prices are going up by 2% - 5% next year. This is the first time I have seen this message since I registered on their platforms last year.

The major kill the government wants to promote is fall in ICE used car sales that will cause a crash in resale value.

Well, how will they achieve? Good Question!

The dealer will be forced to buy a used car from the seller at lower price. If he tries to raise the price of used car, why will I buy a used one. I will shift to a brand new car as I will not get a good value as a third sale will not fetch me a good value. This is because I need to calculate interest and depreciation too along with the value of the car.

This will cause the ICE used car prices to raise and will keep the buyers away and will think about buying a new car and will have higher chances to think about EVs.

There seems to be some thought to distract people away from ICE cars.

[Thilak29]

In the case of car leasing, when the lease term is over and if one chooses to buy the same car from the leasing company, which would be treated as sale, right?

In such a case, leasing becomes a less attractive proposition.

[Nilesh5417]

Originally Posted by PB65

This perhaps will be the most probable outcome of this new taxation. Goes both ways, saves the GST component, and projects the dealer in the lower income slab, thus saving the ITR.

Although, these organised players will be keen on taking advantage of the hike in taxes to increase the prices of the vehicle by a considerable amount. This leads us to benefit number 3 for the dealer, "Hume tax bhi dena hai bhai, to gaadi mehngi hai."

But then again, as a buyer, I can always use cash payment as the ultimate bargain to get down the price.

This is spot on!! This GST craziness has actually made the whole cash / black money is back and bigger than ever before!!

Was just reading today that loose unsalted popcorn has a GST of 5%, adding salt takes it up a level, selling packed takes it up even more and if you caramelize it, it attracts 18% since it's considered as a sweet / chocolate product or something!! Can you imagine the headache that goes in thr accounting for a company that sells popcorn 🍿??

[turbo_delight]

Originally Posted by maddy42

Wow - being taxed on death is remaining.

Inheritance tax is not far away.

[ashishpotdar]

Originally Posted by turbo_delight

Inheritance tax is not far away.

We are headed towards
1. Wealth Tax on assest above 50L (why do you think Income Tax added a declaration for last few years)
2. 20 percent uniform capital gains (irrespective of LTCG, STCG with no indexation) - Higher capital gains on property sale (assuming black component)
3. Tax on PF / PPF /Insurance withdrawals (Interest above 2.5L in PF has already started. The suggestion on withdrawal tax on PF has already been discussed by tax authorities)
4. Higher proportion of PF to be withheld as gratuity
5. Even higher taxation on ICE cars to move towards EV
6. Surcharge and Cess cutoffs will drop down from 1 cr

If popcorn can be classified for taxation, everything else can also be !!!