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Old 19th July 2017, 17:50   #46
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Default Re: Effect of GST on Car Leasing

What is the tax implication on a new lease agreement? Say if I take a car on lease today? I will get a quote from Magma but wondering what's the way to verify the quote...
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Old 27th July 2017, 12:13   #47
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Default Re: Effect of GST on Car Leasing

Has anybody got a quote after GST for vehicle lease. Can you please share/confirm the specifics, is the leasing amount arrived at after after deducting the GST+Cess from ex-showroom price?. Iam yet to get a quote from my company, they are saying kotak has asked to wait till august 2nd week.

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Old 28th July 2017, 08:12   #48
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Default Re: Effect of GST on Car Leasing

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Originally Posted by Th!ru View Post
Has anybody got a quote after GST for vehicle lease. Can you please share/confirm the specifics, is the leasing amount arrived at after after deducting the GST+Cess from ex-showroom price?. Iam yet to get a quote from my company, they are saying kotak has asked to wait till august 2nd week.
Hey! I have received quote from Orix India. The GST applicable on Ex-showroom price has a set-off and thus is passed on in the monthly lease rentals.

e.g -

Ex-showroom price of Crysta - Rs 20,28,000
Vehicle basic cost - Rs 14,18,182
GST at 43% - Rs 6,09,818 (Set-off passed on every month)


Cheers,
Amey
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Old 28th July 2017, 15:33   #49
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Default Re: Effect of GST on Car Leasing

Quote:
Originally Posted by Amey Kulkarni View Post
Hey! I have received quote from Orix India. The GST applicable on Ex-showroom price has a set-off and thus is passed on in the monthly lease rentals.

e.g -

Ex-showroom price of Crysta - Rs 20,28,000
Vehicle basic cost - Rs 14,18,182
GST at 43% - Rs 6,09,818 (Set-off passed on every month)


Cheers,
Amey
Can you share the details:
Interest rate
Monthly EMI
Tenure
Residual value?

For reference, I got a quote from Magma:
Ex-showroom: 19,99,900
Interest rate 13.5%
Tenure 36 months
Monthly EMI: 54398
GST+Cess on EMI: 23391
Monthly lease rental: 77791
Residual value: 18% (as per today's tax structure, this will attract 43% GST)
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Old 28th July 2017, 15:46   #50
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Default Re: Effect of GST on Car Leasing

Quote:
Originally Posted by anandpadhye View Post
Can you share the details:
Interest rate
Monthly EMI
Tenure
Residual value?

For reference, I got a quote from Magma:
Ex-showroom: 19,99,900
Interest rate 13.5%
Tenure 36 months
Monthly EMI: 54398
GST+Cess on EMI: 23391
Monthly lease rental: 77791
Residual value: 18% (as per today's tax structure, this will attract 43% GST)
I would have loved to share the details. But, regret this is being done for my Employer which is confidential.

Just to brief you, we have a 60 months tenure with 15% RV policy.

HINT: Interest rates mentioned by you are high and should be negotiated with Car Leasing suppliers w.r.t base rates provided by banks.

Cheers,
Amey
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Old 28th July 2017, 16:06   #51
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Default Re: Effect of GST on Car Leasing

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Originally Posted by anandpadhye View Post
Residual value: 18% (as per today's tax structure, this will attract 43% GST)
Please note that similar to EMI, the residual value is calculated on the base price (Ex show room - GST) and then the GST is applied. So, there is no extra tax on tax.

e.g. For a 10 lakhs car with 29% GST, the base price will be 775194. So, residual value ( @15%) will be 775194 * 0.15 = 116276. And on this amount 29% GST is added back. So, total residual value = 116276 + 116276 * 0.29 = 149997. This is same as 15% of your Ex Show price in the end. So, no extra tax on tax.

This is applicable to ORIX. Not sure about others like Kotak Lease.

This was the method to calculate EMI and residual value pre GST as well with VAT, albeit with a different rate and base price.
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Old 28th July 2017, 16:17   #52
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Default Re: Effect of GST on Car Leasing

Quote:
Originally Posted by Amey Kulkarni View Post
I would have loved to share the details. But, regret this is being done for my Employer which is confidential.

Just to brief you, we have a 60 months tenure with 15% RV policy.

HINT: Interest rates mentioned by you are high and should be negotiated with Car Leasing suppliers w.r.t base rates provided by banks.

Cheers,
Amey
Interest rate actually makes little difference.

Forget car leasing, just consider a regular car loan for the same amount: 1999900
@9.25% interest rate, the 36 month EMI comes to 63829
@13.5% interest rate, the 36 month EMI comes to 67867

This is no big deal.

The real problem is the monthly GST that gets applied to lease rentals! Which does not apply to regular car loan EMIs!!

In your case, you mentioned you are getting a set-off for this GST part and hence I got interested...

Last edited by anandpadhye : 28th July 2017 at 16:18.
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Old 29th July 2017, 09:31   #53
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Default Re: Effect of GST on Car Leasing

Quote:
Originally Posted by anandpadhye View Post
Interest rate actually makes little difference.

Forget car leasing, just consider a regular car loan for the same amount: 1999900
@9.25% interest rate, the 36 month EMI comes to 63829
@13.5% interest rate, the 36 month EMI comes to 67867

This is no big deal.

The real problem is the monthly GST that gets applied to lease rentals! Which does not apply to regular car loan EMIs!!

In your case, you mentioned you are getting a set-off for this GST part and hence I got interested...
In the corporate world, interest rate quoted plays the major role as it is a direct profit term for leasing companies and competitive bidding.

Coming back to GST set-off, I mentioned set-off of GST applied on ex showroom price of car.

The GST applied on monthly lease rentals invoices cannot be set-off.

Cheers,
Amey
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Old 1st August 2017, 13:13   #54
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Default Re: Effect of GST on Car Leasing

While the new contracts are getting GST input credits, Those who have started the leasing before July are the worst hit with the GST due to double taxation.

I guess the 5th August meeting is supposed to have some resolution on this.
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Old 5th August 2017, 06:52   #55
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Default Re: Effect of GST on Car Leasing

Some good news for leased car owners:
Govt seems to have read their plight post GST.
Excerpt from TOI news:

Quote:
The GST Council, which meets on Saturday, will discuss concerns over leased vehicles, given that the levy has been raised to 43% compared to 12.5-13% VAT earlier. This has resulted into an increase of almost Rs 10,000 a month on a Toyota Altis where one year of the four-year lease has been completed. In addition, it will impact Ola drivers and travel agencies, which depend on leased cars.
http://timesofindia.indiatimes.com/b...w/59923832.cms
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Old 5th August 2017, 07:17   #56
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Default Re: Effect of GST on Car Leasing

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Originally Posted by motorheart View Post
I guess the 5th August meeting is supposed to have some resolution on this.
TOI reports that the Government is likely to discuss, among other issues, the rate of GST levied on car leases.

Quote:
The GST Council, which meets on Saturday, will also discuss concerns over leased vehicles, given that the levy has been raised to 43% compared to 12.5-13% VAT earlier.... This has resulted in an increase of almost Rs 10,000 a month on a Toyota Altis where one year of the four year lease has been completed. In addition, it will impact Ola drivers and travel agencies, which depend on leased cars.
The meeting is also slated to discuss the GST rates on luxury and hybrid cars and on the continuation of old system of taxation on petroleum and natural gas.
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Old 5th August 2017, 22:50   #57
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Default Re: Effect of GST on Car Leasing

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Originally Posted by dailydriver View Post
TOI reports that the Government is likely to discuss, among other issues, the rate of GST levied on car leases.



The meeting is also slated to discuss the GST rates on luxury and hybrid cars and on the continuation of old system of taxation on petroleum and natural gas.
Havent seen any update today on the Car Lease after the GST Council Meeting today, except for this.

Quote:
The GST Council also decided to cut rates for 19 items, the full list of which is yet to be released.
Hoping this list includes Car Lease too.
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Old 7th August 2017, 10:25   #58
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Default Re: Effect of GST on Car Leasing

Hello,

I checked the decisions in the 20th GST council meeting. Unfortunately, there is no word on 'Leased Car'.

http://www.cbec.gov.in/resources//ht...il-meeting.pdf

I am losing my hopes now.
If anyone gets any update from your employer, please plan to post it here. Unfortunately, my employer is not proactive in giving the updates.
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Old 7th August 2017, 11:49   #59
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Default Re: Effect of GST on Car Leasing

This really blows. Is there was a list of the items that were supposed to be tabled for the Aug 5th discussion according to TOI, but can't find on cbec website. The lack of transparency is mind boggling.

They (govt) are more interested in 'tax and spend' and increasing cess but no relief for people who have already paid the excise duty while leasing the car and now in addition we pay GST + cess.

I plan to send an email to Mr. Arun Jaitley's office for whatever it is worth.

Quote:
Originally Posted by VaibhaoT View Post
Hello,

I checked the decisions in the 20th GST council meeting. Unfortunately, there is no word on 'Leased Car'.

http://www.cbec.gov.in/resources//ht...il-meeting.pdf

I am losing my hopes now.
If anyone gets any update from your employer, please plan to post it here. Unfortunately, my employer is not proactive in giving the updates.
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Old 7th August 2017, 12:03   #60
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Default Re: Effect of GST on Car Leasing

Read in TOI today that GST council has decided to increase the Cess on luxury cars & SUV ( i.e. cars above 4m length and > 1500 CC engine) from 15% to 25%.
What this means is that 43% of GST amount on "Lease cars" will further increase to "53%".
I am really not sure what the GST council is thinking but this is a retrograde step for Automobile Industry and brutal for Lease Vehicles purchased before 1st July 2017

http://timesofindia.indiatimes.com/b...w/59946949.cms

Source : TOI

Last edited by Cooltronics : 7th August 2017 at 12:07.
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