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Old 5th July 2017, 10:58   #16
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Default Re: Effect of GST on Car Leasing

We were given multiple options

1. As is..the EMI increases due to GST and residual value ( inclusive of tax ) increases

2. Increase the tenure..EMI and Residual Value(RV) remains the same ( RV in this case is without GST )

3. Keep the same EMI - but RV increases

4. Foreclosure ( at pre GST rates )


Has anyone done any comparative studies? which one has the least net impact?
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Old 5th July 2017, 11:13   #17
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Default Re: Effect of GST on Car Leasing

I had bought XUV using car lease 10 months ago. In our company as part of lease program we don't get petrol/diesel or driver salary benefits. Its just the monthly payment tax saving post adjustment of perquisite.

The Car lease was never a very lucrative option but one which balanced tax saving and interest paid on car lease + residual value.

We were given the option of either extending lease, wait and watch or do a foreclosure.

I had done some rough calculations and with 43% increase the tax benefit is low. Also, with fore closure the exit is not too bad other than arranging a huge fund to pay the leasing company.

Thanks,
Sanjeev
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Old 6th July 2017, 11:17   #18
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Default Re: Effect of GST on Car Leasing

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Originally Posted by SanjeevKalra View Post
I had bought XUV using car lease 10 months ago. In our company as part of lease program we don't get petrol/diesel or driver salary benefits. Its just the monthly payment tax saving post adjustment of perquisite.

The Car lease was never a very lucrative option but one which balanced tax saving and interest paid on car lease + residual value.

We were given the option of either extending lease, wait and watch or do a foreclosure.

I had done some rough calculations and with 43% increase the tax benefit is low. Also, with fore closure the exit is not too bad other than arranging a huge fund to pay the leasing company.

Thanks,
Sanjeev
I am in same boat , I took the car in May'17 and suddenly this month rentals have been increased significantly and I checked with ORIX and they have no updates on representation made to Govt. on dual taxation.
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Old 6th July 2017, 11:53   #19
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Query : As the lease plan operator is registered dealer her will get credit of 43% input on his purchase. So his principle lease value would become only base car value. Lease amount would also reduce proportionately. Adding GST to lease installment would be the future operating method. Does it make so much difference then?
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Old 6th July 2017, 14:00   #20
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Default Re: Effect of GST on Car Leasing

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Originally Posted by sudev View Post
Query : As the lease plan operator is registered dealer her will get credit of 43% input on his purchase. So his principle lease value would become only base car value. Lease amount would also reduce proportionately. Adding GST to lease installment would be the future operating method. Does it make so much difference then?
There is no confusion for a Car Lease that gets initiated post 01-July. As you have called out it works out to the base car value etc.

However, the confusion prevails only for Pre-GST Car Leases. In this case, the transaction was made were the car base value itself was considered higher and only a small amount of tax charged as VAT (14.5%).

The base value included many of the taxes that used to happen at various levels but those in the end are not shown as taxes prior to GST. For these, I do not believe the Dealer would receive a credit of 43%.

The situation looks blatantly unfair as the VAT was already paid to the Govt. Not sure why it takes so much time to get this issue sorted out.
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Old 6th July 2017, 14:56   #21
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Default Re: Effect of GST on Car Leasing

I got an email about 12500 rs increase in EMI of my 20L ex showroom Skoda Octavia. After Income tax benfit, i have to shell out 9K extra. Few friends who have taken AudiA4 and Santafe recently at 30L exshowroom, will be paying additional 19K before tax.

Last edited by motor_breathing : 6th July 2017 at 14:58. Reason: correction
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Old 6th July 2017, 16:50   #22
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Default Re: Effect of GST on Car Leasing

I assume GoI will look into this on priority along with other such GST anomalies and correct them with retrospective(?) effect.

Don't forget, the entire tractor and HCV lease market will potentially collapse with catastrophic financial, social and political repercussions. LMVs are a fraction of lease arrangements!

I advise lessees not to panic and foreclose or sell off at huge losses. Too many players are involved and it will be corrected. The stakes are too high.

Last edited by itwasntme : 6th July 2017 at 16:55. Reason: Too much bold
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Old 7th July 2017, 17:21   #23
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Default Re: Effect of GST on Car Leasing

http://www.moneycontrol.com/news/bus...g-2320919.html

There is some update on moneycontrol for double taxation on leasing
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Old 7th July 2017, 18:06   #24
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Default Re: Effect of GST on Car Leasing

Quote:
Originally Posted by Anuruddhs

There is some update on moneycontrol for double taxation on leasing
Thanks for sharing, looks like wait and watch. For me a total increase of apprx 7K . if the CES is dropped it would be around 4K.
Fingers crossed.
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Old 7th July 2017, 18:44   #25
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Default Re: Effect of GST on Car Leasing

As per my company's leasing provider, they have formed a group along with other providers, and have formed a case. Based on this, they have a meeting coming up with government council on GST on 8th Aug 2017.

Per leasing company, they have asked all of us to hold on to our decisions for a month or so.
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Old 7th July 2017, 19:53   #26
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Default Re: Effect of GST on Car Leasing

What is still not clear to me that how does starting a fresh lease *now* compare to the pre-GST era?
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Old 7th July 2017, 20:32   #27
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Default Re: Effect of GST on Car Leasing

I hope the govt sets the GST for existing lease to 12%. Earlier, it used to be 14.5%. At least 18% is acceptable. But just removing cess is not sufficient. That still means increase of 14% in monthly leases.

Hope govt settles at 12% or 18%. Anything more is unfair. While 1-3% increase in taxes is acceptable, doubling of taxes is not. That too when you end up paying almost 30% tax on a vehicle where tax has already been paid!
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Old 7th July 2017, 23:09   #28
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Default Re: Effect of GST on Car Leasing

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Originally Posted by sanchari View Post
I hope the govt sets the GST for existing lease to 12%. Earlier, it used to be 14.5%. At least 18% is acceptable. But just removing cess is not sufficient. That still means increase of 14% in monthly leases.

Hope govt settles at 12% or 18%. Anything more is unfair. While 1-3% increase in taxes is acceptable, doubling of taxes is not. That too when you end up paying almost 30% tax on a vehicle where tax has already been paid!
I completely agree. If Govt. sets it at anything higher than 18%, it shows that they only want to loot the honest tax payer more . Hoping for a fair judgement.
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Old 9th July 2017, 22:23   #29
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Default Re: Effect of GST on Car Leasing

Quote:
Originally Posted by ptaneja View Post
As per my company's leasing provider, they have formed a group along with other providers, and have formed a case. Based on this, they have a meeting coming up with government council on GST on 8th Aug 2017.

Per leasing company, they have asked all of us to hold on to our decisions for a month or so.
Thanks for this information. Hope this brings some relief to existing leased car. My lease vendor has not communicated the new EMI yet. But I have the rough calculation. I am raising grievance on PMO website. Hope to get cognizance from the government.
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Old 10th July 2017, 16:12   #30
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Default Re: Effect of GST on Car Leasing

Sharing a recent article, hope this means there's some hope for us:

http://www.moneycontrol.com/news/bus...g-2320919.html
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