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Old 7th March 2012, 18:54   #241
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

I would oppose any kind of tax which is paid upfront which is going to be used to pay off useless government spongers because the state's revenue can't afford to pay them according to the Nth pay commission recommendations. That said 80K is being thrown around aimlessly, the excise duty or some such calculation based on the cost of the car would be essential, 80k for a hatch owner and 80k for a luxury car (30+ bracket) would be a travesty. The ministry of heavy industry has opposed this move.

In a diesel heavy market buy diesel cars,because if you run 50k or 5KM a year, you will recover your investment in the end, 6% additional excise duty means around 30k for hatches and 3lakhs at the top end, which seems justifiable. Cheap fuel of any sort is never coming back and its better people get to accept that.
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Old 7th March 2012, 21:00   #242
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

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Originally Posted by avira_tk View Post
I would oppose any kind of tax which is paid upfront which is going to be used to pay off useless government spongers because the state's revenue can't afford to pay them according to the Nth pay commission recommendations.
How is this different from Income Tax or Sales Tax or anything else - those also can be used to pay off useless government spongers?

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Originally Posted by avira_tk View Post
That said 80K is being thrown around aimlessly, the excise duty or some such calculation based on the cost of the car would be essential, 80k for a hatch owner and 80k for a luxury car (30+ bracket) would be a travesty.
Why? Both get the same amount of subsidy at the pump.
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Old 7th March 2012, 21:18   #243
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

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Why? Both get the same amount of subsidy at the pump.
Not really. The subsidy is per litre and the luxury car owner is likely to use many more litres of diesel (and hence subsidy) than the hatchback owner for the same number of km run.
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Old 7th March 2012, 21:47   #244
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

So people are ready to pay a premium of around 1L to the manufacturer n wait for months for the diesel variant of a car in comparison to it's petrol sibling even though it makes a lot less power, stripped of features, has a turbo or not etc. Why? They get this 1L back in x no. Of years/y no. Of kms.

Now what's the fuss if a factor 'z'(additional tax) is added to this x and 'y'? Stop bein hypocrites and just pay up.
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Old 7th March 2012, 21:50   #245
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

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Not really. The subsidy is per litre and the luxury car owner is likely to use many more litres of diesel (and hence subsidy) than the hatchback owner for the same number of km run.
But no one knows who is going to run more number of kms.
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Old 7th March 2012, 22:23   #246
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

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But no one knows who is going to run more number of kms.
A very valid point and I totally agree. The luxury car owners are always made a villain. The modern luxury cars return FE of around 10 if I am not too wrong. Thats similar to what an Innova returns in City ( my own) and a Cruze will return for instance. A small hatch is more probable to 1000+ kms each month whereas most luxury cars may not do that many kms.
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Old 7th March 2012, 23:03   #247
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

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Originally Posted by carboy View Post
How is this different from Income Tax or Sales Tax or anything else - those also can be used to pay off useless government spongers?



Why? Both get the same amount of subsidy at the pump.
My mistake, I should have said new tax with said noble intention, its different because unlike the existing taxes, this will effectively penalize those who have invested into diesel technology by reducing demand.

The subsidy at the pump may be the same, I was doing the social justice angle, but anyway, luxury car owners deserve a break, they pay around twice the cost of a hatch in road tax, in Bangalore atleast.

The distance run per year is a better calculation, then we would all end up with clocked cars as people avoid this indirect tax.
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Old 7th March 2012, 23:39   #248
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

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But no one knows who is going to run more number of kms.
Agreed and thus the only fair way is to collect the extra amount at the fuel station (i.e., remove subsidies). Given that govt is not willing to remove subsidies, I think the only other way is to assume that each diesel car owner is going to do some fixed number of kms in a given number of years and collect more tax for the cars that are likely to consume more fuel for the same number of kms.

Perhaps, it is better to collect tax based on engine capacity rather than the cost of the vehicle.
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Old 7th March 2012, 23:47   #249
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

Sorry for OT.

This is a god forbidden country where mafias rule and the policies are devised by the corporates.

We do not have any hope and keep on paying taxes for the luxuries of parasites called politicians.

Let us not waste our time discussing the Government policies here. We'll get used to them. This is gonna happen for sure.

Sorry for sounding pessimistic.
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Old 9th March 2012, 19:56   #250
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

Here's what Dr. Goenka (President - Automotive, Mahindra & Mahindra) has to say:

Govt plans to impose additional levies on diesel cars-dr-goenka-2-custom.jpg

Q1: The concern is more acute for some of the diesel makers such as yours, on the two issues - one, excise duty and the other on introducing some kind of specific tax on diesel vehicles. How likely do you think it maybe that it comes through in this Budget?


A: We have had lot of discussion on the diesel vehicle tax. It's a hot topic. I would say to some extent it’s an emotional topic. Arguments are being made both pro and against, sometimes not based on data and facts, but more based on emotions.

Our plea to the finance ministry and all the senior officers that we have met is whatever decision is made should be based on correct data and not based on some perceptions that we have about diesel vehicles and the benefit that will come out of diesel vehicle taxation. The primary point that we have made is that overall consumption of diesel fuel for private diesel vehicle use is less than 2%. That's proven without any doubt. Therefore, the whole argument that by doing so we are somehow taking care of the loss due to diesel fuel subsidy doesn't hold water.

Second, the fact that diesel vehicle as it is more expensive because of technology puts further burden on diesel vehicles, which are vehicles that emit much lower CO2 emission. That's the argument that we have made. I think the argument is well understood. I think the argument is well accepted. What the final decision would be, we do not know, but we are hopeful that in the Budget we will not see a damaging hit on the diesel vehicles.

Q2: The Kirit Parikh Committee has gone on and suggested that an additional excise duty of Rs 80,000 on diesel vehicles be levied to discourage consumption of subsidised diesel by personal vehicle owners. Where is the flaw in that argument according to you?


A: Unfortunately, the report is old. The report had some erroneous data. Mr. Parikh himself has accepted that the recommendations need to be relooked at. He has suggested that perhaps a different avenue rather than one time tax on diesel vehicles need to be looked at to make up for diesel subsidy..

There is nothing published as a correction to that report and as such, that report still is quoted. That's my biggest worry because that's the last published authentic government sponsored report. Often people are reading that report and not realising or knowing that the author himself has backed off from what was said in that report. So, the flaw in the argument was some of the numbers that were taken. What was said was 15% of the diesel is consumed by private diesel vehicles. That is not correct as Planning Commission has also talked about that in some forum. That's what my point is.

Q3: The other issue is that CENVAT itself might be hiked by a couple of percentage points in a rollback because of the government's fiscal situation. How would that affect a company like yours?


A: Any increase in CENVAT for us means increase in vehicle prices. That would mean more pressure on demand. But generally, I don't think any decision will be made based on how it affects auto industry only because the government also has to balance its overall need for revenues and the need for growth.

I would hope as an auto manufacturer that that doesn't happen. But if it happens, I don't think it's going to be based just on the auto industry need. It's going to be a difficult year for auto industry. 2011 was not best of the year that we have had and 2012 also appears to be a difficult year. Therefore, though we are not expecting to get any stimulus in this Budget because of the current tight fiscal situation, I would hope there is no discouraging factors that come in the Budget such as increase in CENVAT duty.

Q4: You have had a couple of sticky quarters in terms of margins. If indeed some kind of increase comes through via any tax rate increases, is there enough elbow room to pass it through in full in terms of a price hike? Is demand that elastic or do you think margins may get crimped a bit more as you make adjustments for these tax changes?


A: Any change in tax rate, whether its CENVAT duty or whether its diesel tax, if it happens, which will be unfortunate, we will have to pass it on. There is absolutely no two ways about it. In fact that has been the accepted industry practice for last several budgets where every time the industry has passed on the increase or reduction almost fully.

The customers also have come to accept that that there is not enough cushion that we have in terms of being able to absorb this increases. So, if there is 2% increase in CENVAT rate, the prices certainly will go up 2%. If there is a loss of demand because of that, so be it. We cannot afford to take a hit on margin from where we are today.

Q5: What could be an alternative option to the Diesel vehicle tax which the Govt. might propose?


A: We are of the view that the government should raise diesel prices to market-based pricing, encourage replacement of petrol by diesel and there by save on oil import bill.

Q6: What has been the impact on demand from consumers because of the Diesel Tax issue?


A: Mahindra & Mahindra is also facing a long waiting list because of the sudden spurt in demand. We have a waiting list of 4 – 6 weeks on our Diesel multi-utility vehicles as well as SUVs.

Q7: What do you think would be the impact on the industry and M&M specifically, if a tax is imposed on Diesel vehicles by the Govt.?


A: If there is any tax that comes on diesel vehicles, it will not move demand from diesel to petrol, but it will slow down the industry which has already had a difficult year in 2011. As far as Mahindra is concerned, we would be affected like anyone else. We certainly would reduce our forecast for the next year if such a thing were to happen. It would also impact some of our expansion plans. We may slow down some investments we had planned on the basis of certain assumptions. Thus, we have to wait and see what actually happens to the volume growth. That call will only be taken after the Union Budget.

Q8: Has there been any delay in refund of electric vehicles subsidy and what is the amount?


A: Yes, there has been delay in payments. However, we cannot mention the actual amount. But this subsidy scheme has really helped us and we hope it continues going forward.

Q9: There is usually indirect benefit that companies such as yours get in terms of your tractor profile, when the finance minister alludes to greater spend towards rural schemes. Do you expect any specific action in terms of rural growth impetus or not or are you just working with a neutral kind of tone there?


A: Something will have to be done. I do not know what specific things finance minister might decide to do. But there is a concern right now on the rural economy. There is a concern right now on agri growth.

In the last 3-4months, the tractor industry has been very slow. In fact last two months we have seen de-growth in the industry. That's not just for the tractor industry, everything that is connected to agri. There is a concern right now with the farm prices being under pressure. So, my take is that the finance minister will have to do something on the rural side, whether it is increasing subsidies or some other measure.

My personal view will be that the focus has to be on increasing productivity rather than increasing subsidies for sustenance. Therefore, any focus on mechanisation, water conservation or anything to do with micro irrigation or crop care will have positive impact on the industry and positive longer term impact on rural economy and agriculture.


EDIT on 16th March : Budget announced, please discuss here : http://www.team-bhp.com/forum/indian...car-scene.html (The 2012 Budget and its effect on the Indian Car Scene)

Last edited by Rehaan : 16th March 2012 at 14:17. Reason: Closing note
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Old 9th June 2012, 10:07   #251
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Default Re: Govt plans to impose additional levies on cigarettes and diesel cars

Michael Boneham - President & MD of Ford India - had this to share last evening:

Quote:
“Long-term investment decisions are predicated on and require stable government policies. Short-term, reactionary decisions are not conducive to growth in any industry, especially the automotive industry which generates significant employment and economic impact. If an additional tax on diesel cars is imposed it will make it harder for all automakers to justify future investments and, thus, employment generation. We believe in India, and we are proud to be a good corporate citizen making major investments at this time. However, policies like the diesel tax do not make it easy for us to remain optimistic about the overall business environment in India.”
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Old 13th June 2012, 14:37   #252
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Default Rumor: Rs.1.7 to 2.5 Lacs Extra Tax On Diesel Car

There are "reports" that Government is considering imposing extra levy of Rs. 1.7 lac on small diesel car and Rs. 2.5 Lacs on larger diesel cars to curb its demand among private buyers.

Tata Motors, Maruti, M&M slip on diesel levy reports - The Economic Times

Quote:
Diesel cars may get expensive by Rs 2.55 lakh, with the oil ministry planning to impose a special tax on such vehicles, said an ET report.

"The government plans to impose additional levies of Rs 1,70,000 on small diesel cars and Rs 2,55,000 on medium and large diesel vehicles like sedans and SUVs to check dieselisation of the economy, triggered by the widening gap between petrol and diesel prices," the report added.
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Old 13th June 2012, 14:40   #253
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Default Re: Rumor: Rs.1.7 to 2.5 Lacs Extra Tax On Diesel Car

Rofl The current govt do have some great adviser who wish their downfall asap.

A 4.5lac car to cost 6lac ?
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Old 13th June 2012, 14:44   #254
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Default Re: Rumor: Rs.1.7 to 2.5 Lacs Extra Tax On Diesel Car

Don't know how they arrived at the figures for small and large cars. Even if this is done, should this not be a %age of the factory-price of the car ? While 2.5lakhs extra would be less than 10% of the price a Merc/BMW diesel, 1.7lakhs extra on a car like Swift/Figo would be 25% of its price or more.
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Old 13th June 2012, 14:45   #255
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Default Re: Rumor: Rs.1.7 to 2.5 Lacs Extra Tax On Diesel Car

Hope it will not be implemented in retrospective from 40 years ago !

Our country needs a different kind of fuel in between petrol and diesel I think
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