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Old 27th March 2016, 09:22   #16
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Originally Posted by reignofchaos View Post
Actually no state other than karnataka charges road tax on vat. On top of that, it has the highest road tax in india of 19.92% and the worst possible roads around. It's like a giant slap on the face of the car buyer. No wonder nobody wants to register their car in karnataka.
Lets assume ALL states start charging LTT only on ex-factory price. Whats to stop them from changing the rate from 12% to 30% to make up for the difference?

The only route that will help us forever in future is if all vehicle & fuel taxation comes under GST. That way it is under it a legal framework guaranteed both by center & state and not easy to keep tinkering as per whims & fancies in each budget.

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Originally Posted by SILVERWOOD View Post
BTW:Which state charges annual tax and not LTT for new registrations.?

Waseem
In 2014, I was stationed in Chennai for a few months & wanted to buy my Tata Zest. I was told by the dealer there that I can buy it on 1 year registration & then move to Mumbai.

But eventually, I decided to buy it with LTT in Mumbai & drive down to Chennai.

Last edited by mobike008 : 27th March 2016 at 11:34. Reason: back to back posts
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Old 27th March 2016, 10:20   #17
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Default re: Tax on Tax? Road tax should be calculated on ex-factory price (not ex-showroom)!

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Originally Posted by reignofchaos View Post
Actually no state other than karnataka charges road tax on vat. On top of that, it has the highest road tax in india of 19.92% and the worst possible roads around. It's like a giant slap on the face of the car buyer. No wonder nobody wants to register their car in karnataka.
I think bad roads and high taxation go hand in hand. They 'need' more money to try and 'fix' the roads. It is axiomatic that fraction of road tax actually being spent of roads. I am sure most of the road cess ends up in the 'General Fund of India' and not the NHDP. Must be the same for states.

Last edited by Aditya : 28th March 2016 at 07:39. Reason: Typo
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Old 27th March 2016, 10:44   #18
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Default re: Tax on Tax? Road tax should be calculated on ex-factory price (not ex-showroom)!

Let me give you an example, which happened in my case. I bought a Z800 recently. The breakup's are as below.

Unit Price :: Rs.6,86,462.88\- (A)

VAT @ 14.5% :: Rs.99,537.12\- (B)

Ex Show Room :: Rs.7,86,000\- (C = A + B)

Road Tax @ 20% :: Rs.1,57,200\- (D = 20% of C)

OTR :: Rs.9,43,200\- (E = C + D)

So in effect I paid Rs.19907.42/- more by double taxation . Effectively, Kerala charges tax @ 25.79% for Bikes (all bikes above 2 lakhs are charged similarly).


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Originally Posted by reignofchaos View Post
Actually no state other than karnataka charges road tax on vat. On top of that, it has the highest road tax in india of 19.92% and the worst possible roads around. It's like a giant slap on the face of the car buyer. No wonder nobody wants to register their car in karnataka.
True in case of car, but in case of bikes, Kerala tops the chart.

Last edited by Vasuki : 27th March 2016 at 10:48.
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Old 27th March 2016, 10:55   #19
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Let's not waste time fighting unrealistic battles. States have the right to tax what they want, as long as it falls within the state or concurrent list. All taxes are cascading - so tax on tax is a normal fact of life everywhere in the world.
Frankly, if we argue that road taxes should not be on VAT, we could also argue that road taxes should not be on the value of cars but on their size or weight or usage. We can of course lobby the state legislatures for such changes. But I doubt any court will interfere so blatantly in the power of legislatures to impose taxes.

What we can fight for is for rule of law to be followed while imposing taxes - such as Waseem's fight against the KA one month rule.
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Old 27th March 2016, 11:06   #20
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Default re: Tax on Tax? Road tax should be calculated on ex-factory price (not ex-showroom)!

Precisely the point I talked about with Ranchi RTO while paying LTT for my Civic last year. For calculation of LTT, they took into account the Ex-showroom price which included a hefty VAT figure of 1,22,000/- but they shrugged that off telling me that LTT is calculated on ex showroom and not ex-factory. I had to pay tax on tax this way. In short, I had to pay road tax on this figure too which is simply not justified by any logic that comes to my mind.

I am glad that you Mr. Waseem have again stood against it. As someone said that you are a boon to our forum. I would like to add that you are not just for our forum but to thousands and lacs of people who are directly or indirectly affected adversely by these strange laws of the Govt.

Best Regards,
Saket.
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Old 27th March 2016, 11:10   #21
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Default re: Tax on Tax? Road tax should be calculated on ex-factory price (not ex-showroom)!

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Originally Posted by SILVERWOOD View Post
Why should a state charge Tax On tax.?They should ideally calculate Road Tax on Ex Factory price and not on Ex Showroom price.

Totally agree with you SILVERWOOD.

But AFAIK, the dealers charge the customers on the Ex showroom price but pay the LTT on Ex factory price, that's why we see a difference in the quotation received and in the LTT paid to the RTO.
I myself had a first hand experience regarding this. The dealer had given me a quotation calculating the road tax on ex showroom but ended up paying on the factory invoice. The dealers pay all the taxes on the factory invoice whether to the RTO or for the octroi.
But anyways great effort on your part to take this step so that henceforth the dealers also will not be able to charge more and fleece the customers.
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Old 27th March 2016, 11:19   #22
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Default re: Tax on Tax? Road tax should be calculated on ex-factory price (not ex-showroom)!

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Originally Posted by auto_enthusiast View Post
But AFAIK, the dealers charge the customers on the Ex showroom price but pay the LTT on Ex factory price, that's why we see a difference in the quotation received and in the LTT paid to the RTO.
I myself had a first hand experience regarding this. The dealer had given me a quotation calculating the road tax on ex showroom but ended up paying on the factory invoice. The dealers pay all the taxes on the factory invoice whether to the RTO or for the octroi.
But anyways great effort on your part to take this step so that henceforth the dealers also will not be able to charge more and fleece the customers.
How is this even possible? Dealer is required to give you LTT receipt as paid to RTO. This is a must for your own records.

Anyone paying the dealer more LTT in invoice than the receipt from RTO has been cheated & can file an FIR on dealer. I dont think they would be so stupid & blatant.
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Old 27th March 2016, 11:29   #23
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Default re: Tax on Tax? Road tax should be calculated on ex-factory price (not ex-showroom)!

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Originally Posted by gsurya View Post
In 2014, I was stationed in Chennai for a few months & wanted to buy my Tata Zest. I was told by the dealer there that I can buy it on 1 year registration & then move to Mumbai.
TN does NOT have an option of yearly Tax.

The attached pic is from a Statement of account of an Apartment.

VAT is charged at 4% but the said amount is not added to the total value when the buyer registers the apartment.Why should a car be taxed on ex-showroom which includes VAT.?

Service tax is also excluded from the total sale value as well.

Waseem.
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Last edited by SILVERWOOD : 27th March 2016 at 11:39.
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Old 27th March 2016, 11:42   #24
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Default re: Tax on Tax? Road tax should be calculated on ex-factory price (not ex-showroom)!

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Originally Posted by gsurya View Post
How is this even possible? Dealer is required to give you LTT receipt as paid to RTO. This is a must for your own records.

Anyone paying the dealer more LTT in invoice than the receipt from RTO has been cheated & can file an FIR on dealer. I dont think they would be so stupid & blatant.
It's not a case of being stupid and blatant. It's a general practice amongst the dealers.
Being already aware of this, I had that amount adjusted in the discount given by them. The receipt which we get is of the amount paid to the RTO and not what is charged by the dealership. What I had pointed is the general practice by the dealers to fleece customers.
BTW how many cases have u filed against a dealer or any government body till date? It's easier said than done, but not everybody has the time and patience to file an F. I. R. and pursue the case.

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Old 27th March 2016, 12:06   #25
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Default re: Tax on Tax? Road tax should be calculated on ex-factory price (not ex-showroom)!

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Originally Posted by auto_enthusiast View Post
It's not a case of being stupid and blatant. It's a general practice amongst the dealers.

Being already aware of this, I had that amount adjusted in the discount given by them. The receipt which we get is of the amount paid to the RTO and not what is charged by the dealership. What I had pointed is the general practice by the dealers to fleece customers.

BTW how many cases have u filed against a dealer or any government body till date? It's easier said than done, but not everybody has the time and patience to file an F. I. R. and pursue the case.
I have bought 3 cars & 3 scooters in my life so far, in Gujarat & Maharashtra, was never cheated like this, so no reason to file any FIR. In all cases the road tax quoted by dealer in invoice was what I got a receipt for.
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Old 27th March 2016, 12:23   #26
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Default re: Tax on Tax? Road tax should be calculated on ex-factory price (not ex-showroom)!

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Originally Posted by SILVERWOOD View Post
TN does NOT have an option of yearly Tax.

The attached pic is from a Statement of account of an Apartment.

VAT is charged at 4% but the said amount is not added to the total value when the buyer registers the apartment.Why should a car be taxed on ex-showroom which includes VAT.?

Service tax is also excluded from the total sale value as well.

Waseem.
Road tax is a tax specified for usage of roads managed by an RTO. It doesnt matter on which base its applied, a State can always change the % it applies on any base to defend its revenue stream.

Question is if consumers have enough political influence to change it, its not a legal issue at all.

As for TN, that is what Concorde Guindy told me, I will see if I have any reference left.
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Old 27th March 2016, 13:29   #27
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So the government can levy any percentage as road tax. However, can this issue be taken up that the road tax, which is meant for making and maintaining roads, be applied on basis of size of the vehicle instead of a percentage of the selling price. Hence, we should go back to fixed tax depending on how large the vehicle is. Since the state is already getting paid via VAT for the sale of the vehicle, why should road tax depend on the value of the vehicle as there is no direct correlation between the value of the vehicle and how much road it uses/damages.
Secondly, aren't toll roads also indirect double taxation. Since I have already paid the road tax, why am I being asked to pay again to use a road.
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Old 27th March 2016, 14:00   #28
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Default re: Tax on Tax? Road tax should be calculated on ex-factory price (not ex-showroom)!

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Originally Posted by sgiitk View Post
I think bad roads and high taxation go hand in hand. They 'need' more money to try and 'fix' the roads. It is axiomatic hat fraction of road tax actually being spent of roads. I am sure most of the road cess ends up in the 'General Fund of India' and not the NHDP. Must be the same for states.
In an ideal world maybe but spend a year in Bangalore and you will realize what people are talking about. It is an absolute farce even when they construct a new road, or flyover, the contractors do the cheapest job possible with several undulations and damage which is bound to begin showing itself within the first year itself. This state is looting money and I am sure of it
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Old 28th March 2016, 01:22   #29
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Default re: Tax on Tax? Road tax should be calculated on ex-factory price (not ex-showroom)!

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Originally Posted by gsurya View Post
Road tax is a tax specified for usage of roads managed by an RTO. It doesnt matter on which base its applied, a State can always change the % it applies on any base to defend its revenue stream.

Question is if consumers have enough political influence to change it, its not a legal issue at all.

As for TN, that is what Concorde Guindy told me, I will see if I have any reference left.
RTO doesn't manage roads, they only collect road tax. Road tax is a state subject, but that doesn't entitle them to charge hefty road tax unless they have a robust public transport system.Singapore deters their citizens from buying cars, they issue Certificate of Entitlement (COE) via bidding which sometimes is equivalent or more than the cost of the vehicle.The owner has to pay road tax apart from COE.

If consumers had political will, we wouldn't have been in this predicament.

Waseem.
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Old 28th March 2016, 07:39   #30
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Default re: Tax on Tax? Road tax should be calculated on ex-factory price (not ex-showroom)!

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Originally Posted by SILVERWOOD View Post
RTO doesn't manage roads, they only collect road tax. Road tax is a state subject, but that doesn't entitle them to charge hefty road tax unless they have a robust public transport system.
Who will qualify what is a hefty road tax vis-a-vis a robust public transport system? Vietnam, a country of similar per capita income, taxes cars far more heavily than India and has much worse public transport system even in the major cities. Middle class there cannot afford cars, just 2-wheelers.

This is like approaching courts against the 2.5% increase in service tax in the last year, its not a legal issue.
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