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Old 12th January 2010, 19:55   #16
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Originally Posted by Daewood View Post
I think the old system of Road tax being paid every year is the solution to your problem. But since all car buyers will not like going to the RTO every year to pay taxes, there should be an option of choosing either Life Tax or Yearly taxes.
Are we not paying bi monthly Electriciy , fixed telephone bills and bi annual municipal taxes through banks/ online internet debit/credit cards.

RTO annual road tax payment modes should become more easy in the current e-governance era
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Old 13th January 2010, 11:54   #17
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Originally Posted by harimakesh View Post
Are we not paying bi monthly Electriciy , fixed telephone bills and bi annual municipal taxes through banks/ online internet debit/credit cards.

RTO annual road tax payment modes should become more easy in the current e-governance era
We are paying electicity, telephone bills, water tax, etc, etc on a monthly or bi-monthly basis beacuse the amount varies for every billing cycle, wheras Road Tax is fixed for a particular vehicle size for a fixed number of years.

There are 48.5 lakh registered vehicles in Delhi alone. Even a not so big city like Pune has 19 Lakh registered vehicles. Now imagine how much paperwork and manpower in required every year to collect taxes from these lakh and lakh of vehicle owners. That would be a colossal waste of time and resourses.

E-payment is yet to catch up in India. The reason is, the percentage of internet users in india is just 2.3%. But the percentage of vehicle owners is very high. In chennai it is more than 50%.
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Old 13th January 2010, 13:05   #18
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Lots of complications with the Tax structure in India but problem largely lies not with the laws but the governance of laws. Taxes are high because Infrastructure is falling apart but at the same time Taxes are also high becoz not everything actually goes to Infrastructure. Defense is still the largest pie share holder for Indian Tax payers. Now, we all want peace but it comes at a price and that price is also adjusted in the car we buy. Surely, countries like singapore and Norway are not spending so much on defense. At the same time, A large democracy means coalition is the key to survival. It is also something that slows the growth rate exponentially.

So, Taxation on vehicles is not just limited to roads and infrastructure but who our country is governed. There are changes, if brought, would ease taxation just about everywhere and there are things which can't be changed for 'n' reasons (like the concept of democracy).

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Originally Posted by Daewood View Post
The reality is taxes are really low in India that reducing them further will make the Highways department and city corporations go bankrupt..and we will all be driving on mud roads filled with trenches and potholes.
The road outside my home is just as you describe and I have paid every bit of tax.

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Originally Posted by Traxter View Post
Hence it is not good to tax them too high. If we tax both petrol and cars reasonably their prices will crash more than 50%..
Around 50% of vehicle cost is taxation. So, to achieve 50% reduction in car prices, you would have completely do away with any type of tax which is NOT reasonable.

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Originally Posted by harimakesh View Post
Fully agree with your views. Why a Cab car doing 200K milege in 2 years and private car doing 20K in two years pay a fixed road tax?
Actually in most states, Taxi owners do not pay same tax as private vehicle. In Rajasthan, private vehicle pay one time fixed road tax while Taxi vehicle have to pay annual or semi-annual tax.

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Originally Posted by longhorn View Post
I don't think it's a good thing. As an Indian citizen I should be free to keep to keep my vehicle anywhere within the territorial boundaries of India for as long as I wish to without having to re-register each time I get transferred to some other state by nature of my job.
You do pay separate house tax, council tax, water tax, service tax after having moved states. Just becoz your house doesn't move with you when you transfer and your vehicle does move with you, it will be unjustified.

The RTO taxation is completely a state affair and the need to tax all vehicles from other states serves multiple purposes.

1. State roads are maintained by state government. They need money to build these and invariably it needs to shared amongst all vehicles plied on the roads in the state.

2. Since, any vehicle coming from other state has not paid any form of sales tax, VAT, Octroi, etc it is already a liability and hence at least RTO taxation is a minimum they feel justified to claim.

3. It also helps curb people bringing new vehicles from across the border of states causing substantial taxation losses. For example, Haryana VAT is 12.5% and Rajasthan VAT is 14%. On top of it there is major difference in Road tax making vehicles bought from Haryana a lot cheaper than those from Rajasthan. This causes people from border villages/towns to purchase vehicles in Haryana and save money but cause losses to Rajasthan government. In fact one of my friend's father bought an x5 from gurgaon and saved over 2L on total on-road price causing a loss of 2L to government of Rajasthan. So, case in point is that we flout government laws and hence as a result people with honest intentions also suffer.

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Originally Posted by Daewood View Post
We are paying electicity, telephone bills, water tax, etc, etc on a monthly or bi-monthly basis beacuse the amount varies for every billing cycle, wheras Road Tax is fixed for a particular vehicle size for a fixed number of years.

There are 48.5 lakh registered vehicles in Delhi alone. Even a not so big city like Pune has 19 Lakh registered vehicles. Now imagine how much paperwork and manpower in required every year to collect taxes from these lakh and lakh of vehicle owners. That would be a colossal waste of time and resourses.
Please take into account that over 75% of vehicles (Trucks, Buses, Taxis, Autos) on road today are commercial vehicles which anyways pay annual or semi-annual tax so an extension of same to all vehicles would actually be not such a hassle if tried. In any case, we pay Insurance every year and RTO tax calculations and payment wouldn't be much different.

Last edited by akhilesh51 : 13th January 2010 at 13:10.
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Old 13th January 2010, 14:59   #19
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Originally Posted by akhilesh51 View Post
Around 50% of vehicle cost is taxation. So, to achieve 50% reduction in car prices, you would have completely do away with any type of tax which is NOT reasonable.
I'm not asking for a 50% cut in vehicle prices. All I'm saying is that its not fair on the part of the govt to charge 50% tax on a new vehicle. Somewhere in the region of 15% should be reasonable.

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Originally Posted by akhilesh51 View Post
You do pay separate house tax, council tax, water tax, service tax after having moved states. Just becoz your house doesn't move with you when you transfer and your vehicle does move with you, it will be unjustified. 2 lakhs is not a small amount. You can buy a brand new Maruti 800 for than amount. It just shows the amount of fleecing done by state govts in the form of taxes.
Except for the fact that I don't have to pay upfront for 15 years and everything is charged on pay per use basis and I am not liable to pay any of these if I sell of my house after a certain period of time.

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Originally Posted by akhilesh51 View Post
The RTO taxation is completely a state affair and the need to tax all vehicles from other states serves multiple purposes.
Why then don't they tax you at every state border if you are driving from say, Delhi to Mumbai in your private vehicle?

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Originally Posted by akhilesh51 View Post
1. State roads are maintained by state government. They need money to build these and invariably it needs to shared amongst all vehicles plied on the roads in the state.
We need money to maintain our vehicles as well. Will the govt pay you for the damages caused to your vehicle due to bad roads?

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Originally Posted by akhilesh51 View Post
2. Since, any vehicle coming from other state has not paid any form of sales tax, VAT, Octroi, etc it is already a liability and hence at least RTO taxation is a minimum they feel justified to claim.
I don't think double taxation is justified in any case. Either the state govt should collect tax for a max period of two years at a time or if they insist on collecting LTT, the onus should be on them to tranfer the amount on pro rats basis to the next state govt. It is not that sales tax, VAT, Octroi, etc has not been paid. It has been paid to the state govt where the vehicle has been bought and IMO that's fair enough. Else the state govt can start collecting sales tax, VAT, Octroi, etc also on pro rata basis along with road tax, say every two years. I don't subscribe to the thought that I need to keep paying sales tax, VAT, Octroi, etc to each and every state govt as I keep moving around from state to state.


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Originally Posted by akhilesh51 View Post
3. It also helps curb people bringing new vehicles from across the border of states causing substantial taxation losses. For example, Haryana VAT is 12.5% and Rajasthan VAT is 14%. On top of it there is major difference in Road tax making vehicles bought from Haryana a lot cheaper than those from Rajasthan. This causes people from border villages/towns to purchase vehicles in Haryana and save money but cause losses to Rajasthan government. In fact one of my friend's father bought an x5 from gurgaon and saved over 2L on total on-road price causing a loss of 2L to government of Rajasthan.
I think he is well within his rights to do that. If your neighbourhood shopkeeper sells you apples at Rs 150/kg, while you are able to get the same at Rs 100/kg from a shop a few hundred metres away, from whom would you buy? Avoiding tax is not a crime, evading tax is.

Last edited by longhorn : 13th January 2010 at 15:08.
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Old 13th January 2010, 15:09   #20
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An Exmaple :
Toyota Prius Expected price in India 26.5 Laks. In US its $25000 *50 = 12.5L.
So diff amount is almost 14L. Is that all for tax to Indian GOVT, dont think so. It also about the company profit margin. MNC try to keep more % profit as India is an emerging country and we have demand in our country.
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Old 13th January 2010, 15:12   #21
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Originally Posted by arin_12 View Post
An Exmaple :
Toyota Prius Expected price in India 26.5 Laks. In US its $25000 *50 = 12.5L.
So diff amount is almost 14L. Is that all for tax to Indian GOVT, dont think so. It also about the company profit margin. MNC try to keep more % profit as India is an emerging country and we have demand in our country.
The Toyota Prius comes in as a CBU(completely built unit) from Japan. Hence it is taxed at 110%. Yes you read that right - One hundred and ten percent. The entire difference of 14 L goes to the governement coffers.

Last edited by longhorn : 13th January 2010 at 15:13.
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Old 13th January 2010, 16:51   #22
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I'm not asking for a 50% cut in vehicle prices. All I'm saying is that its not fair on the part of the govt to charge 50% tax on a new vehicle. Somewhere in the region of 15% should be reasonable.



Except for the fact that I don't have to pay upfront for 15 years and everything is charged on pay per use basis and I am not liable to pay any of these if I sell of my house after a certain period of time.



Why then don't they tax you at every state border if you are driving from say, Delhi to Mumbai in your private vehicle?



We need money to maintain our vehicles as well. Will the govt pay you for the damages caused to your vehicle due to bad roads?



I don't think double taxation is justified in any case. Either the state govt should collect tax for a max period of two years at a time or if they insist on collecting LTT, the onus should be on them to tranfer the amount on pro rats basis to the next state govt. It is not that sales tax, VAT, Octroi, etc has not been paid. It has been paid to the state govt where the vehicle has been bought and IMO that's fair enough. Else the state govt can start collecting sales tax, VAT, Octroi, etc also on pro rata basis along with road tax, say every two years. I don't subscribe to the thought that I need to keep paying sales tax, VAT, Octroi, etc to each and every state govt as I keep moving around from state to state.




I think he is well within his rights to do that. If your neighbourhood shopkeeper sells you apples at Rs 150/kg, while you are able to get the same at Rs 100/kg from a shop a few hundred metres away, from whom would you buy? Avoiding tax is not a crime, evading tax is.
Totally agree with you, buddy. My post outlined why a certain policy is in practice and I am myself against governance lapses in our nation but at the same time, a lot of our policies arise from the fact that our nation is highly democratic, socio-capitalist nation which means that we are not conforming to any one particular economic, political, social, racial bias. This is brilliant on paper as we proudly have in past (and present) claimed to have most evolved constitution but since nothing is perfect, we have shortcomings which are compounded by poor governance.

We adopted the system of states and state boundaries al a United States of America but at the same time also have National ruling al a United Kingdom. So, what you end up with is two separate entities both in need of monies to fund itself even as we are still united as a nation.

Even in automobile taxation, of the 50% taxation, there is a split between state where manufacturing plant is located, central government, and state of retail of vehicle.

Now any reduction in taxation would require a separate reduction from each of the entities involved which is just about impossible because of the fact that we are a democracy and have separate governments heading each of the above mentioned entities which may or may not be same and would allege that the other entity be the first one to reduce taxation and this will go on and forth since their is no definitive head of power, again thanks to us being a democracy.

With the problem defined, the solution to our problem lies in change in governance of India which I am sure you agree would not happen ages to come.

That leaves with a problem and no solution which means we as people of India, World's largest democracy and world's best constitution and neither completely socialist economy nor completely capitalist economy, have to just get on with the burden of taxation whether we like it or not.

And No, you can't claim damages on your vehicle because of bad roads because even if we hypothetically consider this situation, the money paid to you will actually be taken from you.

Also, your comparison between taxation and apples would hold true if we were a capitalist economy. Sadly, as I have already pointed out, we are neither socialist nor capitalist and hence it just doesn't work! When you buy apples from a shopkeeper with lower prices, it is smart. When you buy a vehicle from different state to save taxes, it is tax evasion and crime! Remember all those bollywood celebrities and rich business scrambling for cover when customs department came after them on pretext of evasion of duty while importing vehicles.

What we do have as a part solution is to go and VOTE. Not to a party but a candidate. Believe me the difference lies just there.

Last edited by akhilesh51 : 13th January 2010 at 16:56.
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