Re: Rich folks are not so rich? 65% of Lamborghini buyers finance their purchase Quote:
Originally Posted by D33-PAC What occupation in India makes 10 crores in small cities? Dividend income people? |
Any doctor that owns a hospital is easily making that much, you have the emergency room, OPD, ICU,your own pharmacy, beds , trust me it's like a hotel on steroids.
Pharmacy profit margins can reach 1000%, compare that with a restaurant, each bed costs around a hotel room and each to costs more than a hotel room, an emergency visit will set you back more than 15k for a few hours there, ICU is another ballgame Quote:
Originally Posted by AnInternetUser While I 100% agree with the points you've mentioned, I don't think the 49% is that simple. The surcharge has different slabs too + marginal relief. Additionally, the cess is calculated on the tax payable and not on the entire amount. This would mean that the total would be much lesser than 49%.
I'm not a CA or tax expert by any means, so don't quote me on this. But if my Tax classes in uni from two years ago serve me right, the figure would actually be much closer to 35% or so.
While the specific amounts in the calculation would be pretty different, the point still remains. But just thought I'd point this out |
I pulled it online, I don't know how Indian tax system works but checked it online Quote:
Originally Posted by dealer Any sources that you would recommend reading more about this on? I've always had an interest in understanding how the elites have been able to do this but haven't found any detailed explanation yet. |
I don't have any sources but it's personal experience, when I was in India I used to have a sit down with my CA atleast once a month to go over my income taxes and GST, GST was another amazing tax reform. Even though it was botched up with too many slabs, politics and a common person not used to paying taxes but it really simplified the tax rebate system and no business was paying tax on tax thus being able to get better profits and at the same time provide the customer with better service Quote:
Originally Posted by v1p3r When you mean cash poor, do you mean cash that is accounted for? Because it's getting very hard to use black money to buy a car. So yes, even an extremely wealthy person will not have 15 cr sitting around in white money, because it can be put to work at 12-15% quite easily. That will pay your Lambo EMI, assuming a rich person wants to buy a Lambo.
I would be surprised if any doctor who owns a small hospital makes LESS than 2.5 crores a year. I'm not sure where you're getting your income figures from, but I know enough salaried professionals who make more than that. And that's not even the real bulk money, which is with businesses in Tier 2 cities.
Also, 2.5 crores will nowhere be near enough to buy a decent Lamborghini. At a 2.5 cr income, you get about 1.6 cr in hand. A Lamborghini costs upwards of 4 cr. No one wise spends more than 20% of their income on a car. So you're looking at a maximum of 35 lakhs a year (assuming taxed income) being spent on EMIs. Suddenly, you're looking at something around the S Class level.
No one becomes, or remains (hello Anil!) rich by throwing money around on toys. You'll also notice that almost no self-made billionaires in India drive fancy cars themselves. If anything, it's their children who drive them. This is unlike the US and Europe, where people have a passion for cars. Put that down to us not having a car culture.
Can you run that maths once again? Little confused with the tax rate and the switch between crore and million.
With 2.5cr turnover you can easily get around 2.3 in hand if you are able to do your taxes properly. There are way too many expenses you can show and you also have the option to pay a flat 6% tax on your turnover. Multiple expenses you can show
1. Payments to employees
2. Salary to your self and then u can show deductions on that
3. Cars
4. Building depreciation ( which is huge)
5. Equipment ( which is on loan) depreciation
6. Collections
7. Fuel
And while loan underwriting depreciation actually is counted as a positive to the income so I see huge companies making losses but still getting loans because of the huge depreciations they claim
The actual EMI over the whole year for the car costing you would be close to 42L / year with the deductions like I explained below
Sorry been used to the million system for a long time now,
Buying a car at 4,00,00,000 you can claim an yearly depreciation at an average 15% that would be 60,00,000 , . That is tax savings at 35% of 21,00,000. Since many of these cars are financed at 7% for 7 years. Interest is another 21,00,000. It's higher in initial years due to amortization but let's take it at that for simplicity. Total tax savings of 30,50,000. Your EMI is around 6,00,000. Yearly tax savings - 30,50,000. Yearly EMI - 72,00,000. Car cost per year - 42,00,000. You are also able to deduct insurance, service, tyres etc.
The bigger benefit is to hoteliers and car trade sector. You are able to claim a full refund on your GST. That IMO is the another factor. A normal 50 key hotel with banquets has an yearly revenue easily crossing 15cr. Out of that GST is levied on all consumables and being able to claim each and every rupee of that is huge. Your car would cost you less than half of the price .
The phrase for this is 'hood rich'. |
Easy access to credit is the major reason for it. Currently with my credit I can walk to any dealerships and just take out whatever car I want. Most of the lenders do stated income and you can state your income according to your credit. My interest rate would be 2-3% on any vehicle purchase. Could be 0% too. Even people with bad credit are given loan albeit at a higher interest ( upto 24%) as long as it makes a sale because the repossession is system in US is very streamlined
Last edited by V12Doc : 25th February 2020 at 15:42.
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