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Old 31st January 2010, 05:49   #1
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Default Query about car taxes in India

I am trying to understand the various taxes and duties imposed on automobiles in India. Please bear with me because I am a noob and a little out of touch with the Indian car scene.

1. Import Duty on CBUs (Completely Built Units) is 110%. Is that right? I am assuming a CBU enters the country fully assembled including wheels?

2. Import duty on CKDs (Completely Knocked Down) is 55%. Is this right? How do we define a CKD? I am assuming all the parts needed to assemble a car are shipped in a crate and just the assembly takes place in India. What is the rationale behind taxing CKDs at a much lower rate than CBUs? Is this because the GoI (Government of India) wants to encourage the companies to open up plants in India to assemble cars and generate employment?

3. On what numbers are the above tax rates applied? On the price of the car in the country it is manufactured in? Let's suppose a car ImportedCar is imported from HomeCountry where its suggested retail price Rs 1000. By the time ImportedCar comes to India, it costs 1000 + 1.1(1000) = 2100. I see a couple of problems with this. First, doesn't the 1000 include the profit margin for the manufacturer in HomeCountry? Their actual manufacturing cost may be much lower. Second, what if ImportedCar is not sold in HomeCountry at all but is just manufactured there. Bottomline, how exactly does the GoI determine the real value of ImportedCar?

Or does the GoI back-calculate the import duty based on the price of the car in India? I doubt this is the way it works.

4. What the hell is ex-factory price? How does one arrive at ex-showroom price from ex-factory price? I know ex-showroom price varies from state to state but, typically, how much money in percentage terms does the GoI - state or central - devour? What are those taxes called? Does ex-factory price also vary from state to state and if yes, is there some ex-baseline price which is the same throughout the country?

Do CBU and CKD cars have ex-factory prices too?

5. Excise duty. From what I know, it is 20%. Is it also applied on CBUs and CKDs? I know that cars less than 4m in length AND powered by a petrol engine smaller than 1.2L or a diesel engine smaller than 1.5L have only an 8%. So, as long as you stick to the capacity restrictions, you can turbocharge, sypercharge or some other charge, and still pay only 8%, right. What on earth is excise? Is it only applied on cars in India? Lastly, on what number is this duty applied on - exFactory or something else?

6. On the Road Price. How does one get from ex-showroom to OTR price? Sales tax? Is there any lifetime road tax? Any other lifetime or yearly tax? I keep hearing terms such as VAT, Octroi etc. What are they and where in the taxation hierarchy are they applied? I know all these vary by state, so please give me some ballpark numbers.

Is there some resource anywhere which compares the tax rates across all the states?

7. This is if I missed anything you think I will be interested in. Insert your own question and answer it



I count at least 25 question marks in my post. Please answer them one at a time with links to official GoI documents, if possible. And no, don't ask me to search the forums, I already did.
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Old 31st January 2010, 07:30   #2
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I'll try to answer as much as I know
Quote:
Originally Posted by tacho View Post
I am trying to understand the various taxes and duties imposed on automobiles in India. Please bear with me because I am a noob and a little out of touch with the Indian car scene.

1. Import Duty on CBUs (Completely Built Units) is 110%. Is that right? I am assuming a CBU enters the country fully assembled including wheels?

110% is only when a company does it. When an individual wants to import then the vehicle has to be more than $40k for it to be imported without homologation. Also the taxation is in the range of 146% or slightly more IIRC
Quote:
Originally Posted by tacho View Post
2. Import duty on CKDs (Completely Knocked Down) is 55%. Is this right? How do we define a CKD? I am assuming all the parts needed to assemble a car are shipped in a crate and just the assembly takes place in India. What is the rationale behind taxing CKDs at a much lower rate than CBUs? Is this because the GoI (Government of India) wants to encourage the companies to open up plants in India to assemble cars and generate employment?
I think the present rate is in the high 20's and there are classifications in the type of parts being brought as well like sheet metal or engine components et al. Will check out and let you know. The whole idea of lower taxation is to increase employment opportunities in India and I think there is nothing wrong in that.

Quote:
Originally Posted by tacho View Post
3. On what numbers are the above tax rates applied? On the price of the car in the country it is manufactured in? Let's suppose a car ImportedCar is imported from HomeCountry where its suggested retail price Rs 1000. By the time ImportedCar comes to India, it costs 1000 + 1.1(1000) = 2100. I see a couple of problems with this. First, doesn't the 1000 include the profit margin for the manufacturer in HomeCountry? Their actual manufacturing cost may be much lower. Second, what if ImportedCar is not sold in HomeCountry at all but is just manufactured there. Bottomline, how exactly does the GoI determine the real value of ImportedCar?
The tax is imposed on the landed cost of the vehicle. The landed cost will also include freight. The cost of the vehicle at the exporting country will be taken into account and most of the time it is a special price much lower than the regular ex-factory price of the car. For e.g: say a car "x" in India has the EX-FACTORY Price of Rs 1 Lakh at which the excise duty is going to be imposed at the gateif it is to be sold in India.So the NDP of car X become Rs 1.2096L (8% Excise Duty on 1 Lakh and then 12% VAT on 1.08L) before freight and transit insurance. Now if the same vehicle is for export, the ex-factory cost will be about Rs 92k (Duty drawback of 8% on all components used to assemble the car) and there will be no Excise Duty. All countries work on variants of this system. Please also check Transfer Pricing for greater clarity.


Quote:
Originally Posted by tacho View Post
4. What the hell is ex-factory price? How does one arrive at ex-showroom price from ex-factory price? I know ex-showroom price varies from state to state but, typically, how much money in percentage terms does the GoI - state or central - devour? What are those taxes called? Does ex-factory price also vary from state to state and if yes, is there some ex-baseline price which is the same throughout the country?

Do CBU and CKD cars have ex-factory prices too?
I hope my above post has clarified your query

Quote:
Originally Posted by tacho View Post
5. Excise duty. From what I know, it is 20%. Is it also applied on CBUs and CKDs? I know that cars less than 4m in length AND powered by a petrol engine smaller than 1.2L or a diesel engine smaller than 1.5L have only an 8%. So, as long as you stick to the capacity restrictions, you can turbocharge, sypercharge or some other charge, and still pay only 8%, right. What on earth is excise? Is it only applied on cars in India? Lastly, on what number is this duty applied on - exFactory or something else?
CBU's are exempt from Excise Duty if no addition has been in the country. As already stated the ED is levied on Ex-Factory price which is the cost of the vehicle as sum of all parts, labour and share of overhead costs. Generally most companies back calculate this price from the ideal Ex-Showroom price they want to have.


Last edited by MileCruncher : 31st January 2010 at 07:33.
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Old 31st January 2010, 21:47   #3
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Great!

Quote:
Originally Posted by MileCruncher View Post
I'll try to answer as much as I know

I think the present rate is in the high 20's and there are classifications in the type of parts being brought as well like sheet metal or engine components et al. Will check out and let you know. The whole idea of lower taxation is to increase employment opportunities in India and I think there is nothing wrong in that.

Got it. High 20s for CKDs but may vary depending on the type of parts. High 20s doesn't sound too bad.


Quote:
The tax is imposed on the landed cost of the vehicle. The landed cost will also include freight. The cost of the vehicle at the exporting country will be taken into account and most of the time it is a special price much lower than the regular ex-factory price of the car. For e.g: say a car "x" in India has the EX-FACTORY Price of Rs 1 Lakh at which the excise duty is going to be imposed at the gateif it is to be sold in India.So the NDP of car X become Rs 1.2096L (8% Excise Duty on 1 Lakh and then 12% VAT on 1.08L) before freight and transit insurance. Now if the same vehicle is for export, the ex-factory cost will be about Rs 92k (Duty drawback of 8% on all components used to assemble the car) and there will be no Excise Duty. All countries work on variants of this system. Please also check Transfer Pricing for greater clarity.
I appreciate your effort but I had a CBD (complete break down) trying to understand this. Please break this down to me like I am a 4 year old.

I will use the following example to convey what I understood:
Toyota is importing the Camry to India as a CBU from Japan where its ex-factory price (or more accurately, a lower special price) is Rs 1 Lakh (or the equivalent Yen). Toyota ships this to India on a Titanic-like cruiser for Rs 10,000 which includes transit insurance. The GoI, in an uncharacteristic moment of generosity, refuses to receive the excise duty + VAT, and in fact, gives out a 8% discount. So, the landed cost of the Camry now becomes 92k + 10k = 1.02 Lakh. My understanding is that the 110% duty is slapped on this 1.02 Lakh and the final figure (2.1 Lakh) becomes the ex-showroom price. Is this right? Can Toyota bloat this figure to 3 Lakh for making a quick buck and not affect the import duty it pays the GoI?

And what is NDP?


Quote:
I hope my above post has clarified your query
Ex-showroom = Ex-factory + Excise (8% or 20%) + 12% VAT. These two duties don't apply to CBUs or does the VAT still apply to CBUs? Do both excise and VAT apply to CKDs?

Quote:
CBU's are exempt from Excise Duty if no addition has been in the country. As already stated the ED is levied on Ex-Factory price which is the cost of the vehicle as sum of all parts, labour and share of overhead costs. Generally most companies back calculate this price from the ideal Ex-Showroom price they want to have.
This is what I am having trouble with. If my Camry example above is true, the ex-showroom price depends on the special price in Japan + Shipping etc. + 110%. Where does back-calculating figure in this, unless they can come up with whatever special Japanese price they wish? And where does the company's profit margin in India fit in?



Last edited by tacho : 31st January 2010 at 21:49.
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Old 27th January 2016, 06:48   #4
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Default Inter-state taxes on self-driven cars in India

Hi All,

Can someone throw some light on inter-state taxes to be paid while travelling between state borders across india. As per carzonrent and zoomcar site, there is no mention of inter-state taxes applicable for most of the sates.

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For zoom car, see below

http://www.zoomcar.com/outstation

Are inter-state taxes required for self-driven cars?
Do we have to stop at every state border RTO and pay the taxes?
How much charges will be levied if we don't pay the taxes?

Need some valuable inputs from senior members.
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Old 27th January 2016, 10:08   #5
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Default Re: Inter-state taxes on self-driven cars in India

Let me say, so far in a private vehicle I have been able to driver across about 10 states, never having to pay a paisa as a tax. I was driving for short visits. Do not given the states new ideas please!
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Old 27th January 2016, 10:40   #6
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Default Re: Inter-state taxes on self-driven cars in India

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Let me say, so far in a private vehicle I have been able to driver across about 10 states, never having to pay a paisa as a tax.
True; no tax when I drove a MH-reg car from Pune to Gurgaon or the HR-reg from B'lore to Gurgaon.

Rules would be different for rental cars since they are yellow plates, correct?

Even HR-registered cabs have to pay tax while heading into Delhi.
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Old 27th January 2016, 10:49   #7
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Default Re: Inter-state taxes on self-driven cars in India

No tax needs to be paid for private number plate cars with white plates. Tax is applicable for yellow boards and yellow on black boards (self drive rentals like zoom).
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Old 27th January 2016, 11:37   #8
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Default Re: Inter-state taxes on self-driven cars in India

Yes - tax should be paid if you are driving a self driven rented vehicle with yellow & black number plate.
If it is a long stay in other state, it is better to pay. If it is a short stay, that too not in a city, you can try your luck.
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Old 27th January 2016, 12:39   #9
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Default re: Query about car taxes in India

Can someone share the RTO Checkpost for each state while travelling from chennai to Vadodara (NH4) in self-driven car with Karnataka Registration.

Since it's a KA registration car, I wouldn't have to worry until I cross Karnataka.

If anyone can share co-ordinates for Maharashtra and Gujarat RTO Checkpost, it would be of great help.
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Old 1st February 2016, 09:20   #10
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Default Re: Query about car taxes in India

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Originally Posted by udayjani View Post
Can someone share the RTO Checkpost for each state while travelling from chennai to Vadodara (NH4) in self-driven car with Karnataka Registration.

Since it's a KA registration car, I wouldn't have to worry until I cross Karnataka.

If anyone can share co-ordinates for Maharashtra and Gujarat RTO Checkpost, it would be of great help.
MH - Between Nipani and Kolhapur. it was a pain since the officer had gone somewhere

GJ - as you cross chanod and enter vapi, there is a big toll booth, cross the toll and to your left is the RTO, computerised, organized and Rs.60 for a week stay

Will check my records and get back with exact locations
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