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Old 19th October 2016, 10:37   #106
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Default Re: GST effect on car prices?

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Originally Posted by Muski View Post
Let's see if manufactures pass this advantage to customers.
Most manufacturers will sight the reason of rising input costs and will mention they are absorbing it with the tax rate change. They will pass on a portion of it. When the cars are selling with the higher tax rates, why would they pass on the full amount, every manufacturer will see this as an opportunity to generate additional cash flows.
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Old 20th October 2016, 10:23   #107
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FYI - Looks like the existing prices will be maintained post-GST as per article in ET. We will need to wait and watch till Nov 1st week for final rates.

http://economictimes.indiatimes.com/...w/54945445.cms

Quote:
Several people tracking the ongoing GST Council meeting said unlike the multiple incidence of taxation levied currently, the proposed tax structure will see a uniform rate of 26% on cars.

Since the current levels range from 29-52%, there will be an additional cess to recover the revenue loss due to implementation of GST, they said. “Unlike the expectation yesterday (Tuesday) that the bigger cars will gain, it is clear now, it will not,” said one of several people tracking the development from an auto industry perspective
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Old 20th October 2016, 11:14   #108
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Default Re: GST effect on car prices?

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Originally Posted by concorde24 View Post
FYI - Looks like the existing prices will be maintained post-GST as per article in ET. We will need to wait and watch till Nov 1st week for final rates.]
Many states are opposing the cess for multiple reasons.Centre hopes to settle GST rate structure in the next meeting of GST council scheduled for November 3 and 4.
It will be truly disappointing if cess model is followed, defeats the purpose of GST.

http://www.deccanchronicle.com/busin...-gst-rate.html
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Old 20th October 2016, 16:14   #109
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Default Re: GST effect on car prices?

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It will be truly disappointing if cess model is followed, defeats the purpose of GST.
Unfortunately that is the reality, the GST is just to beautify the existing tax structure and temporarily appease the public. Can't think of 1 reason on why the government would give up on the taxes (irrespective of state or central).

Either ways, if the "cess" proposal is rejected, expect an increase in the tax slab of luxury and sin goods from 26% to ~30%.

I presume the cars are only going to get more costlier.
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Old 27th October 2016, 18:08   #110
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GST is not as simple as it made out to be. There going to be lots of confusion and compliance would be a headache for most businesses and one can forget about input credit as per this article.
http://taxguru.in/goods-and-service-tax/gst-simple.html
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Old 31st October 2016, 20:23   #111
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Looks like GST will impact car prices for sure. Especially the premium cars in >30L segment. Is it worthwhile waiting till we have clarity.
I can see that 3 Series and C class are selling at huge discounts.
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Old 31st October 2016, 20:42   #112
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@ JP1

The Input Tax Credit mechanism is already at work in Karnataka State. It's an absolutely fantastic system.
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Old 3rd November 2016, 17:22   #113
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Default Re: GST effect on car prices?

The Goods & Services Tax (GST) Council has finalized a four-rate tax structure -- 5, 12, 18 and 28 percent
.
.
While the cars will be under 28 percent category, luxury cars will be taxed much higher.

http://www.moneycontrol.com/news/eco...s_7891321.html

No impact on small/large car prices with respect to taxation!
Was sitting on the edge since a month. This clears the way to book my ecosport
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Old 3rd November 2016, 17:47   #114
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Default GST effect on car prices?

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Originally Posted by anurag.somani View Post

While the cars will be under 28 percent category, luxury cars will be taxed much higher.



http://www.moneycontrol.com/news/eco...s_7891321.html



No impact on small/large car prices with respect to taxation!
First and foremost, congratulations on the car. My family just chose it last week to become a part of the garage.

On other issues though, isn't 28% higher for cars? With GST, wouldn't all the variations in terms of length based tax be diluted, and hence, the prices of small/medium cars go higher than it is now? I thought with all the coupling of innumerable taxes, these were taxes in between 20-25%.

I learn luxury cars will be taxed at 40%. I think that's lower than the presiding rates, that can be higher than 40 for Uber and luxe segments. I am sorry, I am not very clear on how it gets beneficial for us to buy cars. I foresee car makers jumping up and jacking car prices in the lower segments and holding them for the upper ones.

One thing I am very very hopeful is that only two slabs are implemented for cars - luxury and non-luxury. It's high time we get rid of engine capacity, length and height of cars to determine its tax incidences. Maybe going ahead, we can see more proportionate looking cars, and taxes can be determined by the value of the car (however now it'll be interesting to see how the Govt. defines luxury?)

Last edited by methecupid : 3rd November 2016 at 18:06.
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Old 3rd November 2016, 17:56   #115
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Though the cars will be charged at 24% the govt is planning to implement a cess over and above the tax. I believe the cess could be even a 100% of the tax amount. So luxury cars and tobacco products will likely qualify for a 100% cess.
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Old 3rd November 2016, 18:06   #116
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Default Re: GST effect on car prices?

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Originally Posted by methecupid View Post
On other issues though, isn't 28% higher for cars? With GST, wouldn't all the variations in terms of length based tax be diluted, and hence, the prices of small/medium cars go higher than it is now? I thought with all the coupling of innumerable taxes, these were taxes in between 20-25%.

I learn luxury cars will be taxed at 40%. I think that's lower than the presiding rates, that can be higher than 40 for Uber and luxe segments. I am sorry, I am not very clear on how it gets beneficial for us to buy cars. I foresee car makers jumping up and jacking car prices in the lower segments and holding them for the upper ones.
I see the tax-burden on small cars increasing slightly and on luxury cars to remain similar. (expect diesel cess to be steep after India signed the climate agreement)

I do not think government had any political incentive to reduce taxes on automobile sector which provides it considerable tax revenue and has a small vote-base.

Observe closely that tax rates for essential items (food, FMCG etc.) is in 0 - 5% category.

It's not beneficial for car-buyers. Many people; esp. those looking for luxury cars; were sitting on the fence & can now go ahead with the purchase since the prices are not going to fall post GST implementation.
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Old 3rd November 2016, 18:11   #117
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Default Re: GST effect on car prices?

Presently there are 3 kind of Taxes on cars manufactured in India -

Excise varying from - 12,5 % to 30 %
CST - 2 % Against C Form - on Manufacturer sales price to Dealer
VAT - Mostly 12,5 % -14 %

Typical Net Landed considering 1 Lac Manufacturer Billing under present Taxation for Small Cars

Basic - 100000 , Add Excise 12,5 % , Add CST 2 % Add VAT 12,5 % = Rs 129000

As per GST considering Slab of 28 %

Basic - 100000, Add GST - 28 % - Rs 128000

Now it is still not cofirmed how Goverment defines small cars in GST regime. They will surely not like to lose the existing revenues and will classify higher segment cars as Ultra-Luxury. I have a hunch that this classification of SUV & Luxury cars may get absorbed and we may have only one Ultra- Luxury Cess or whatever they term for such cars & SUV over and above this 28 % Slab

http://www.siamindia.com/economic-af...8&pgidtrail=19
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Last edited by Turbanator : 3rd November 2016 at 18:13.
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Old 3rd November 2016, 19:22   #118
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Default Re: GST effect on car prices?

After all the hue and cry on how the GST will amplify drastic reduction in car prices, specially small cars, the whole fiasco ended up keeping prices almost where they already are.

A few price hikes between now and 31st March 2017, and the GST will prove to be an ineffective exercise.

Ironically, any chances of prices going down any further comes back to how the government differentiates between small and big cars - according to the present (and infamous) 4-metre length cutoff and similar engine displacements, or something more simpler/comprehensive.

But, for now, much ado about (next to) nothing.

Last edited by RavenAvi : 3rd November 2016 at 19:35.
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Old 3rd November 2016, 19:48   #119
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GST Council to finalise 4-tier tax structure of 5-28 percent.

It is understood that the GST Council has decided on a four-tier GST tax structure of 5, 12, 18 and 28 percent, with lower rates for essential items and the highest for luxury and de-merits goods that would also attract an additional cess.

Essential items including food, which presently constitute roughly half of the consumer inflation basket, will be taxed at zero rate, with a view to keep inflation under control. While common use items will be taxed at the lowest rate of 5 percent, there will be two standard rates of 12 and 18 percent. The GST rates will become applicable from April 1, 2017.

While this could mean that small cars could benefit from the new tax structure, larger or 'luxury' cars may turn more expensive. While it can be surmised that all luxury cars (along with aerated drinks and tobacco) will have to bear the highest slab of 28 percent tax, an additional cess is mostly likely to be imposed to items that are currently taxed at 30% (excise duty and VAT).

The final tax structure and greater clarity on the subject will be revealed tomorrow once the GST Council concludes its meeting.

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Last edited by volkman10 : 3rd November 2016 at 19:49.
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Old 3rd November 2016, 21:14   #120
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So what is 'luxury car' in GST lingo? Is that >4m and >1500cc engine?
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