Quote:
Originally Posted by audioholic Just to share my experience, I had to pay LTT for my SX4, for which we had been previously paying annual tax. As per the company offer, we had got discounts in excess of Rs 40k when we had brought the car. This was clearly stated in the Bill. The ex-showroom price had been reduced and after that all other additionals were calculated. So, the ex-showroom price of the car was just 6.7Lakh(SX4 - ZXi). Without discount, it was close to 7.2L.
On visiting the RTO superintendent for the calculation of LTT to be paid by me, the lady considered the invoice amount WITHOUT DISCOUNT. Even though the price for the car was less, I had to pay the same road tax, ie equal to the ex-showroom price of a non discounted car!
That is how bad our system is. Technically, 14.5% of the invoice value had to be paid by me. Invoice value is 672000, but she did not take the same amount for LTT calculation. |
I am not sure what LTT is? i cannot comment on it. Would you please provide more information on this?
Quote:
Originally Posted by anandpadhye I think this is actually to prevent cheating.
It's equivalent to ready reckoner for the real estate.
If you are buying a flat, there is a certain minimum price (ready reckoner) that has to be paid. Even if the transaction happens at a lower price, registration tax is calculated on the ready reckoner price. So I think in case of automobiles, ready reckoner is the ex-showroom price announced by the manufacturer.
I think, until last year, the dealers were allowed to sell at lower price (lower than ex-showroom) and submit registration tax amount on the actual discounted price but the government has changed it now. |
This is correct with respect to real estate because
- On a future date, your property may be required for the government for road expansion or for a Fly-over. In this case, they pay the price that is decided by the government, if not every one would demand huge inflated price. In this scenario it a necessity for the government to regulate the price if not, the whole state budget will be eaten away by politicians just for an airport expansion.
- Government grabs thousands of acres every year to encourage industries and for other requirements from people/farmers. In order to give the right price for the owners, this law was made. This ensures that no OWNER Looses his property because of the greed of government officials. (Our law runs on one principle: You may excuse a criminal but shouldnt punish an innocent. justice may be delayed but not denied.)
- This pricing of real estate helps government to calculate the networth of the country, which is projected to other countries too. so this is verymuch required.
I couldnt corelate why the tax amount is fixed on a car? Scratching my head.
Always the tax is calculated on the invoice price. Not on the landing price. The car company pays one set of tax. Car making cost + 1st set of tax + Buffer amount of 50K or 70K = Ex showroom price. On which we pay another tax called Life tax. Correct me if required.
The dealer will pay the tax based on the (invoice price (price paid by customer) - Landing price ).
Assume, the tax paid by the dealer is 30%. if the margin on a car is say
40K. If the dealer gives 30K as discount, so effectively, the dealer is paying 30% of 40K = 12000 as tax. Which is not possible.
Quote:
Originally Posted by ramzsys IIRC, my uncle's Tavera got discount on the ex-show room price. This was specifically mentioned by the sales advisor to sweeten up the deal. |
I guess, this is the correct way. Thanks for sharing this information. This proves that the trade is being done either wrongly or there is something missing.
Quote:
Originally Posted by nkrishnap How the discounts given by the dealer is black money? Isn't discount given by the dealership eats up its own margin by reducing the profit per car or even loss in certain cases.
The conversion of black money to white money by investing in dealerships is one thing and the discounts are completely different and may not involve money laundering. |
Assume you are the dealer and you have 100 Cr black money.
You want to covert it into white. So you start a showroom.
Your cars are not selling. You say to manufacturer and get a rebate of 20K more from them. So your landing price is 6L and ex showroom is 7L
On every car (1 lakh margin Just imagine.), you give 30K off from Black, and invoice amount is same. you are paying it from Black to the customer. You are selling the car at no discount price.
So on 1L (7L ex showrrom - 6L landing price) you pay Tax and your money is white. Down the line, the black money vanishes and you end up having All WHITE. isnt it?
If the invoice amount is reduced then, you pay 30% tax on ( 6.4 Lakh (after discounts) -6L (Landing price.) ) .
28K profit after tax roughly.
In the earlier case, 70K profit after tax. in white. so effectively you have made 70-28K white.
The basic thing, if you are into retail then you pay tax on your earnings. you need not pay any tax if you are making LOSS. if you make 10L loss then you can claim for exemption on loss made for the next 3 financial years. Case is different for manufacturers because they get some other benifits in the form of land or infrastructure or other stuff.