KA cracks down on luxury cars for under-invoicing

According to a media report, the Karnataka transport department is asking vehicle dealers to register cars at ex-showroom prices. The move has particularly hit the luxury car segment where large discounts are frequently passed on to the customers.

Car dealers of luxury and high-end automobiles are now reluctant to register such cars. It has been reported that the transport department has decided to take action against dealers who under invoice cars at the time of registration. The authorities have argued that discounted luxury vehicles are causing a loss in revenue. In terms of tax collection, the transport revenue ranks 4th after commercial taxes, stamps & registration and excise departments. It has been reported that registrations of luxury cars have gone down after this move.

Last year, the Telangana High Court ruled that lifetime tax (LTT) on vehicles can only be levied on its invoice price and not its ex-showroom. This is not the first time the Karnataka transport department has been in the news. In Sept 2017, the Supreme Court had asked them to refund the tax collected after passing the 30-day rule that required out of state cars to pay LTT if the cars remained in the state for more than 30 days. The Central Motor Vehicles act allows a 12-month period to register a vehicle in another state.

Source: Economic Times