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Old 10th July 2017, 16:14   #31
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Default Re: Effect of GST on Car Leasing

There is an article in Moneycontrol which gives us some hope of an action taken during next GST council meeting in August.
While we cannot expect earlier VAT equivalent rates, deduction of Cess of 15% can still be a little better as compared to what is been charged right now.

http://www.moneycontrol.com/news/bus...g-2320919.html
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Old 10th July 2017, 17:32   #32
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Default Re: Effect of GST on Car Leasing

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Originally Posted by Cooltronics View Post
There is an article in Moneycontrol which gives us some hope of an action taken during next GST council meeting in August.
While we cannot expect earlier VAT equivalent rates, deduction of Cess of 15% can still be a little better as compared to what is been charged right now.

http://www.moneycontrol.com/news/bus...g-2320919.html
Had read it last week but decided to close the lease. End of this GST era impact on the car lease. Didnt want to two wait further.
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Old 12th July 2017, 14:22   #33
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Default Re: Effect of GST on Car Leasing

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Originally Posted by SanjeevKalra View Post
Had read it last week but decided to close the lease.
Did you foreclose the lease by paying residual value or returned your car to the vendor? What were the extra charges that you had to pay?
My employer has not given me any clear picture on the change in EMI.

I had raised a grievance on http://pgportal.gov.in/.
I got the response as follow:
"Your valuable suggestion has been noted."
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Old 12th July 2017, 14:56   #34
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Default Re: Effect of GST on Car Leasing

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Originally Posted by VaibhaoT View Post
Did you foreclose the lease by paying residual value or returned your car to the vendor? What were the extra charges that you had to pay?
My employer has not given me any clear picture on the change in EMI.

I had raised a grievance on http://pgportal.gov.in/.
I got the response as follow:
"Your valuable suggestion has been noted."
Hi Vaibhav,

Its little late to discuss this topic.
I chose option of buying the car as our lease is too simplistic with no frills like other companies.

Had to Pay: Book value, VAT, TCS, 1% penalty, Service Tax and insurance recoverable. few values are pro rated.

For us Lease was never too lucrative.

Thanks,
Sanjeev
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Old 14th July 2017, 07:24   #35
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Default Re: Effect of GST on Car Leasing

The message seems to have reached the relevant officials now and they are looking at it:

Finance Ministry Looks to Provide Tax Credit for Car Leasing under GST
Car Lease

Hopefully by 08-Aug we should have a decision that is fair!
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Old 14th July 2017, 08:08   #36
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Default Re: Effect of GST on Car Leasing

What's the GST rate for new car leases after 1 July? Will the monthly outgoing from the lessee be less, same or more than it was for pre-July?
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Old 14th July 2017, 11:52   #37
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Default Re: Effect of GST on Car Leasing

What would be the GST effect for new cars taken under lease post July 1st, under the GST era?
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Old 14th July 2017, 14:47   #38
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Default Re: Effect of GST on Car Leasing

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Originally Posted by ac-cobra View Post
What's the GST rate for new car leases after 1 July? Will the monthly outgoing from the lessee be less, same or more than it was for pre-July?
Quote:
Originally Posted by sairamboko View Post
What would be the GST effect for new cars taken under lease post July 1st, under the GST era?
From what I understand, the ex-factory price of the car now is equal to ex-showroom cost - 28%. I am not sure if Compensation Cess (Depending on the category of the car) is included into it or not. And usually lease rentals are calculated on the ex-factory cost and add to this, the lease rentals which includes the new GST 28% + Compensation Cess. This is the norm that majority of the leasing companies follow.

Given that, ex-factory cost of the car is considerably less now, which means that the lease rentals will be on lesser capitalized amount and that amounts to lower EMIs. Lease Rental Taxes would be more after GST, but the value is negligible in difference as the ex-factory amount is now considerably lower.

Pre-GST :

For Innova Crysta GX 2.8 AT, Ex-Showroom Price was 16.36L. So the lease rentals is calculated on 14.29L as the ex-factory Price (14.5% of Ex-Showroom). Lease rental taxes would be 14.5% + Service Tax of Capitalized amount. Leasing companies usually charge higher interest rate compared to Banks, but it will be on the capitalized amount. In this case, ~12% Interest for tenure of 5 years (usually ranges from 2 - 5 years).

Post-GST :

For the same Innova Crysta GX 2.8 AT, Ex-Showroom Price is 16.06L. And the lease rentals would be calculated on 28% of the Ex-Showroom Price, i.e ~11.5L. So the lease rentals would be considerably lesser when compared to pre-GST rates.

Last edited by samabhi : 14th July 2017 at 14:59. Reason: Added example
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Old 15th July 2017, 15:45   #39
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Default Re: Effect of GST on Car Leasing

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Originally Posted by vsrivatsa View Post
The message seems to have reached the relevant officials now and they are looking at it:

Finance Ministry Looks to Provide Tax Credit for Car Leasing under GST
Car Lease

Hopefully by 08-Aug we should have a decision that is fair!
Agree. What are your lease companies doing for the month of July -- using the increased EMI or sticking to the old one?

Also, does anyone have a clear idea on what input tax credit means -- does this affect our EMIs? Or will the EMIs be increased and we have to go through some complicated procedure towards the end to get this tax credit?
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Old 15th July 2017, 20:16   #40
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Default Re: Effect of GST on Car Leasing

Luckily I got the option to foreclose the car lease before July 1st. Interestingly, I had taken this lease option whereby I could surrender the car without buyback and I was paying EMI on the depreciation value rather than total value of the car. This way I was paying EMI of only about 60% of normal lease plans, and I had to pay only 40k to surrender the car and terminate the lease.

Post July 1st, there would have been a -VAT +43% GST impact, which is still agreeable. However the foreclose or buyback value would have shot up like crazy and this would not be financially viable. You could not have made up that money in the second hand market and net-net it would have been a huge loss for the buyer.

However it seems new leases are more beneficial to the employee post-GST due to input tax credit (or whatever). Anyone knows how this works?
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Old 15th July 2017, 21:14   #41
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Quote:
Originally Posted by samabhi View Post
I am not sure if Compensation Cess (Depending on the category of the car) is included into it or not. And usually lease rentals are calculated on the ex-factory cost and add to this, the lease rentals which includes the new GST 28% + Compensation Cess.
Post-GST :

For the same Innova Crysta GX 2.8 AT, Ex-Showroom Price is 16.06L. And the lease rentals would be calculated on 28% of the Ex-Showroom Price, i.e ~11.5L. So the lease rentals would be considerably lesser when compared to pre-GST rates.

Is there any clarity if the cess is also deducted to arrive at ex-factory cost? Else when we pay the lease rentals we will be paying cess extra and hence overall cost of leasing a car becomes costlier compared to pre-gst lease renting.
Need to check from people from my company who have leased post gst for such cars like Innova
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Old 17th July 2017, 14:08   #42
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Default Re: Effect of GST on Car Leasing

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Originally Posted by harishhm74 View Post
Is there any clarity if the cess is also deducted to arrive at ex-factory cost? Else when we pay the lease rentals we will be paying cess extra and hence overall cost of leasing a car becomes costlier compared to pre-gst lease renting.
Need to check from people from my company who have leased post gst for such cars like Innova
Since Cess is part of the GST regime, I would think that it would be deducted to arrive at an ex-factory cost. Otherwise we are in the same double-taxation issues which was rampant pre-GST.

It would be interesting to see the post-GST calculations published by the companies. My company hasn't yet.
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Old 17th July 2017, 14:11   #43
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Default Re: Effect of GST on Car Leasing

My rental has gone up from 32058 to 40525

This is for a 10.8 lakh loan for three years
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Old 17th July 2017, 21:37   #44
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Default Re: Effect of GST on Car Leasing

Mine is up from INR 38,656 to INR 48,278 i.e an increase of INR 9,622 per month.

This was for the XUV500 W8 Auto for a 4 year lease car plan
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Old 17th July 2017, 21:45   #45
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Default Re: Effect of GST on Car Leasing

Quote:
Originally Posted by Eddy View Post
My rental has gone up from 32058 to 40525

This is for a 10.8 lakh loan for three years
Quote:
Originally Posted by mjkaushal View Post
Mine is up from INR 38,656 to INR 48,278 i.e an increase of INR 9,622 per month.

This was for the XUV500 W8 Auto for a 4 year lease car plan
Dont despair guys - there is hope that Govt. will reduce it in August. All is not over yet.
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