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Old 3rd September 2017, 12:33   #106
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Default re: GST cess on midsize sedans, SUVs & luxury cars hiked

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That is what democracies are supposed to do. If the governments pander to rich minorities, then they are just plutocracies. That is what USA has become in the recent years. Few super rich guys fund all the political campaigns and in turn politicians make policies to help the super rich.

Most democratic countries focus on poor because the rich can manage quite nicely by themselves in any country, under any kind of economic system.
But our minority consists of the Middle class and Super Rich, while our majority consist of only the poor. Somehow I feel it's the Middle class taking all the brunt of bad political decisions.

In democratic countries like the US I think wealth is almost evenly spread unlike how we have it here where almost max wealth is with the super rich and as way things are going that gap is only going to widen further.

Here too I feel most policies are favoring the super rich who in turn help fund most political campaigns. Nothing different from the US but only difference is huge wealth disparity between the super rich, Middle class and poor.
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Old 3rd September 2017, 12:52   #107
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Default re: GST cess on midsize sedans, SUVs & luxury cars hiked

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But our minority consists of the Middle class and Super Rich, while our majority consist of only the poor. Somehow I feel it's the Middle class taking all the brunt of bad political decisions.
Check out of the definition of middle class in India. How many in this middle class are affected the this GST cess?

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In democratic countries like the US I think wealth is almost evenly spread unlike how we have it here where almost max wealth is with the super rich and as way things are going that gap is only going to widen further.
You are describing the US of 60-70s. Today's USA is getting closer to India.
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Old 3rd September 2017, 12:58   #108
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Default re: GST cess on midsize sedans, SUVs & luxury cars hiked

While a lot of members wonder why the tiny world of people who can afford cars in our country moan on increasing taxes, the point for me is the poor allocation and transparency of it. How many us, who buy cars, know what happens to the tax money which we pay at the time of buying cars (and any other commodity/services for that matter)? Corrupts enjoy luxury at the cost of tolerance of poor skins and 'its okay, can't do much', attitude of who understands what's really happening.

I have paid taxes honestly for all my life, and will happily pay more if I see the right use of it. Corruption, scams - they break my confidence and make me wonder why do we allow some bunch of corrupts to make a fool of us. Guess we never got our independence. Only the ownership got shifted from those goras to brown skin corrupts.
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Old 3rd September 2017, 14:44   #109
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Default re: GST cess on midsize sedans, SUVs & luxury cars hiked

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Sorry, didn't get it. How would it increase cash transactions?
Cash = no bill = no tax = cheaper product.

Many hotels, restaurants, service providers, even some shops selling goods of variable sizes (metals, wood, carpets, etc.) will entertain your request of lower prices provided you pay in cash.
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Old 3rd September 2017, 16:11   #110
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Default re: GST cess on midsize sedans, SUVs & luxury cars hiked

I don't know if this would be still possible after GST. Had a conversation with a friend who is a trader and learned that the new GST returns include details of the stock as well, so that the traders can claim the GST credit. The distributor has to file details of how much stock they picked up from the manufacturer, how much did they distribute to each retailer and how much is left with them. Each retailer then has to confirm that they received "X" amount of items from distributor. Both the figures should match.

If such a system in place, then I think it is difficult to evade GST and lower the prices if paid in cash. The case could be different in case of perishable items though.

Disclaimer: I'm not an expert on the GST returns. This information was provided by a friend which I did not cross-check and could be wrong.
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Old 3rd September 2017, 17:28   #111
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I don't know if this would be still possible after GST. Had a conversation with a friend who is a trader and learned that the new GST returns include details of the stock as well, so that the traders can claim the GST credit. The distributor has to file details of how much stock they picked up from the manufacturer, how much did they distribute to each retailer and how much is left with them. Each retailer then has to confirm that they received "X" amount of items from distributor. Both the figures should match.

If such a system in place, then I think it is difficult to evade GST and lower the prices if paid in cash. The case could be different in case of perishable items though.

Disclaimer: I'm not an expert on the GST returns. This information was provided by a friend which I did not cross-check and could be wrong.
It is still very easily possible to fool the system, but only if all three viz. manufacturer, distributor and retailer are in on it.
The manufacturer will under report his production and then the distributor and retailer sell that extra product without bill in cash.

However, the good thing with how GST input credit works, is that if the manufacturer is honest or if the government can implement an iron clad system for monitoring manufacturer's then there is no way to circumvent paying the indirect taxes by the end customer, without the retailer taking a loss.
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Old 4th September 2017, 08:41   #112
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Default re: GST cess on midsize sedans, SUVs & luxury cars hiked

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It is still very easily possible to fool the system, but only if all three viz. manufacturer, distributor and retailer are in on it.
The manufacturer will under report his production and then the distributor and retailer sell that extra product without bill in cash.
I manufacture Engineering and High Performance Polymers stock shapes and components. Believe me, the scenario you have outlined is just not viable. There are a whole slew of products and services in any manufacturers supply chain. Any manufacturer who does what you suggest will lose credit. While there are a minority today who circumvent GST, it is simply not a sustainable practise. Even in the textile industry, players are embracing GST and seeing how to work in the future.
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Old 4th September 2017, 09:05   #113
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Default re: GST cess on midsize sedans, SUVs & luxury cars hiked

Just a suggestion: People who have IT returns of lets say last 5 years are exempted from the increased CESS, this would have improved transparency also this would help the middle class honest tax players feel and act good.
I guess honest tax payers should be incentivised and many schemes should be linked to IT returns.
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Old 4th September 2017, 09:32   #114
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Just a suggestion: People who have IT returns of lets say last 5 years are exempted from the increased CESS, this would have improved transparency also this would help the middle class honest tax players feel and act good.
I guess honest tax payers should be incentivised and many schemes should be linked to IT returns.
I think, while the suggestion itself being fair, it is absolutely not possible in real world. Paying Tax/Cess is a duty of a citizen and not a loyalty based program where the payments can be credited as cash back. I do not think any country in the whole wide world has this option of rewarding their honest tax payers, which is a bit disappointing to be quite honest. While Cess increase can still be debated if there is a will, automobile, especially private cars, being termed a "luxury" item, it can spring nasty surprises to the government if they ever lower it. I do not think the government wants to project itself as anti-mangoman.

I am not sure if the risk is worth taking for the government for such a small percentage of vote base.

I am wondering why the Taxi aggregators are not protesting the cess increase? Are they shielded from this change? When they can do for 3rd party insurance premium increase, why not GST cess?
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Old 4th September 2017, 09:43   #115
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Default re: GST cess on midsize sedans, SUVs & luxury cars hiked

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Paying Tax/Cess is a duty of a citizen and not a loyalty based program where the payments can be credited as cash back.
Hold your horses there, friend. It's not a "duty" by any means if there's no demonstration of the usage of the tax itself. On one side, we continue to pay taxes and on the other side, there are brilliant folks like the TN minister who try to stop water evaporation using Thermocool. Where's his duty to be an educated administrator?

In other countries, there's a definite guarantee of services (at least at a minimal level) if you pay tax. Here, there is absolutely none. Instead of burdening the tax payers with additional taxes, let them first 1. demonstrate appropriate usage of taxes and provide a clear balance sheet and 2. normalize the taxes depending on the necessity.

It's just crazy to think that we are paying 0.5% kisan cess but we are hearing about farmers dying. What is this cess for? We pay 0.5% education cess but we don't see the education gap being filled. We pay road tax (along with a celestial group of other taxes) but see the condition of our roads. You can argue that we need to pay to get our services done but I'd say the other way around. Do it and I will pay.

I think successive governments play on our patriotism and nationalist pride to get more money out of us. My patriotism doesn't lie in me working 14 hour days and paying the government while the government squanders it away in silly schemes.
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Old 4th September 2017, 10:22   #116
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Here is the latest development.

http://www.moneycontrol.com/news/bus...76911.html/amp
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Old 4th September 2017, 14:04   #117
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Default re: GST cess on midsize sedans, SUVs & luxury cars hiked

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In my opinion, anything beyond a small hatchback should be heavily taxed in this country. We should discourage citizens from buying cars . It is not a country for cars. We do not have the roads nor we have any sane drivers behind the wheels.
Well they why did I have to pay over 100% import duties, 28% GST, 15% CESS, 10% RTO charges for my Mini Cooper S. Also you contradict yourself by discouraging people to buy cars and complain about the infrastructure. How are we supposed to be productive if we can't get to work? Car is not a luxury if there is non-existent public transport. Most of our Metro cities aren't even completely covered by Metro rail yet.

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Any democratic government makes rules based on what benefits the majority, and not the tiny minority. So you can't expect the tax regime to be kind to this <1% people who can afford nice cars. That is how an government economist would view it and make policy.
I disagree with your calculation based on private car ownership, there are a lot of people who depend on cars for transport (Uber?/Carpool). India badly needs cars to get around because even the capital city of Delhi is not completely covered with Metro. Also, you need to take into consideration the cars are already taxed obscene amount because of duties on components, CKD kits etc. There needs to be a reform in how we determine what constitutes a *luxury* car, heck while we are at it, we need to have a reform in how we give out driving licences to drive as-well.

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I do not think any country in the whole wide world has this option of rewarding their honest tax payers, which is a bit disappointing to be quite honest.
I remember reading on more than one occasion about places like Hong Kong giving tax rebate/refund/cash back (whatever you want to call it) at times when they had surplus tax collection.
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Old 4th September 2017, 14:18   #118
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Default re: GST cess on midsize sedans, SUVs & luxury cars hiked

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I disagree with your calculation based on private car ownership, there are a lot of people who depend on cars for transport (Uber?/Carpool). India badly needs cars to get around because even the capital city of Delhi is not completely covered with Metro. Also, you need to take into consideration the cars are already taxed obscene amount because of duties on components, CKD kits etc. There needs to be a reform in how we determine what constitutes a *luxury* car
Again, you are talking from a car enthusiast POV. Policy makers don't care about that, and they shouldn't.

True development comes when rich people use mass transport, and not when poor people use cars. Government must focus on that that goal.

During my first Japan visit in 2013, I was hanging around with some journalists at Kyoto train station. They spotted somebody getting down from the train with his wife, and ran to talk to him. It was the former CEO of Maruti Suzuki, travelling in train like a normal person. He was quite surprised to find so many Indian reporters who knew him.
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Old 4th September 2017, 14:18   #119
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Default re: GST cess on midsize sedans, SUVs & luxury cars hiked

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I disagree with your calculation based on private car ownership, there are a lot of people who depend on cars for transport (Uber?/Carpool). India badly needs cars to get around because even the capital city of Delhi is not completely covered with Metro. Also, you need to take into consideration the cars are already taxed obscene amount because of duties on components, CKD kits etc. There needs to be a reform in how we determine what constitutes a *luxury* car, heck while we are at it, we need to have a reform in how we give out driving licences to drive as-well.

I remember reading on more than one occasion about places like Hong Kong giving tax rebate/refund/cash back (whatever you want to call it) at times when they had surplus tax collection.
India (for that matter, any country) does not need cars badly. What we badly need is a proper public transport facility. We need reforms, but most of those reforms are needed in the field of public transport and urban planning. Things will sort out once these reforms are carried out. When I say reforms, i mean serious reforms planned and executed by professionals instead of politicians and bureaucrats.

What Samurai said is right. 1% of population does not count when you focus largely on vote bank. I am sure not even half of us 1% go out and vote.

Hong Kong can afford to reward tax payers as they can have surplus tax collection. Here 3% of population pays income tax and many others find ways to evade indirect taxes too. We will never have something like 'surplus' tax collection.

P.S. My comments are solely on the points you raised and not on GST and the cess thereof. I believe the whole principle behind GST is being defeated by so many slabs and subsequent cess.
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Old 4th September 2017, 14:23   #120
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Default re: GST cess on midsize sedans, SUVs & luxury cars hiked

The cess worries me less rather the way it is being implemented, as an afterthought to one of the most important tax rollouts of recent times. They had ample time to prepare yet they missed it.

Demonetization saw roughly 50+ policy changes in 60 days, making rules as we go.

Why launch such big ventures when not ready ? Why not wait a couple of more months and iron things out.

It would only make one lose confidence in policy making.

I second to a statement someone made, GST has infact made most things expensive, partly because sellers have taken advantage.

E.g. I used to eat a certain meal for Rs.70 in my office canteen, post GST they have slapped 18% GST and made it Rs.83/-.
Weren't they paying taxes earlier? Service tax? VAT ?

Ideally they should have deducted those charges and then slapped on the GST but they are instead misusing it to earn a quick buck.

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