[pathik]

What would be interesting to see is how much manufacturers will try to increase their prices once this change is cleared by the Government - whether it would the same as pre-GST or additional on top of current prices i.e. higher than Pre-GST rates.

[sparky@home]

GST Council proposes hike in additional cess from 15 to 25 percent; Central government to seek legislative amendment to implement the same.

So now is the time to buy a suv/large car before there is a steep hike.

http://www.autocarindia.com/car-news...y-again-405626

[Mad Max]

The idea that taxation of the wealthy will lead to a better life for ALL citizens has zero proof nor has it showed any value. The x% of people who sweat their butt off for the other 100-x% doesn't mean we keep increasing the tax for the x%. Let's do the following first

1. Accountability for the roads that are built using the road tax.

2. Make the RTO a transparent system

3. One nation - One number plate - One tax

Also the argument that "luxury brands" are automatically liable to pay taxes is flawed. Your average luxury car has better technology, EMS and (sometimes) better pollution systems built in that your average hatch. So, better safety for individuals (resulting in lesser burden on nation if occupants are harmed), lower pollution (resulting in better environmental impact) and longevity (this can be debated - "how flatbeds would go out of business" thread" hehe ).

The whole idea that GST is going to STREAMLINE (not reduce / increase) rates was the initial hypothesis. This doesn't look like streamlining. This looks like we are being again shoved into yet another tax regime with minimal guardrails or accountability.

[Arjun Reddy]

Can the CAs correct me if I am wrong.
So assuming that we will now go back to 53% GST, will this be the net effective tax?
Don't the manufacturers have to pass on the input credit? Or what ever they collect minus what they pay? The effective tax then becomes the difference between the two?
Isn't the anti profiteering clause active?
So should it be say 53% minus input credits?
Will we see this being passed on once the first or second cycle is completed?
So effectively the GST should be lower than the prescribed 53%?

I could be totally wrong here. Can the experts advise.

[84.monsoon]

The previous Vat regime also incorporated input credits. Now with GST, they can offset service tax also which previously they could offset only in a limited way. So the input credit for the goods side was always being availed and passed to the extent the market dictates the price point.

So I don't see a major change in price of cars purely due to input credits coming in from GST regime.

[ac-cobra]

Originally Posted by Mad Max

The idea that taxation of the wealthy will lead to a better life for ALL citizens has zero proof nor has it showed any value. The x% of people who sweat their butt off for the other 100-x% doesn't mean we keep increasing the tax for the x%.

Exactly. I was considering buying a new car in the next few months. With an increase in GST, I will probably wait a year more and probably buy something cheaper. The biggest loser in all this is the Government as they will get less of my money and much later.

[Turbanator]

So should it be say 53% minus input credits?

Yes but remember most of this was also same under VAT regime, so apart from 2% CST on the manufacturer to Dealer invoicing, nothing is going to be different under GST. A major portion of purchases for a manufacturer was from within the same state under VAT so on purchase side there will be a negligible effect.

[jaaz]

Originally Posted by Arjun Reddy

Can the CAs correct me if I am wrong.
So assuming that we will now go back to 53% GST, will this be the net effective tax?
Don't the manufacturers have to pass on the input credit? Or what ever they collect minus what they pay? The effective tax then becomes the difference between the two?
Isn't the anti profiteering clause active?
So should it be say 53% minus input credits?
Will we see this being passed on once the first or second cycle is completed?
So effectively the GST should be lower than the prescribed 53%?

I could be totally wrong here. Can the experts advise.

Your Questions are Valid, subject to the following:-

1. VAT - Value Added Tax was introduced in 2003 and GST was supposed to follow in the coming years. But GST was delayed in implementation, by almost 14 years, due to Opposition Parties. So, the system of Input Credit is already built-in in our taxation system.

2. VAT, Service Tax, Luxury Tax etc., were merged and named as GST. Out of all other Taxes, VAT & Service Tax are prominent. And both these Taxes are already levied on the manufacturers. So, except the different rate of taxes in different states, VAT & GST are similar.

3. The highest tax on input materials is 28% and Output tax of 53% will not offset the same.

So, the conclusion would be that you'll end up paying the extra 10%, if it's implemented.

[yatin]

Look at how much such goods are being taxed, and how much other services are being taxed. You would think it is like import & is being discouraged!

One month ago, the Centre's income went from 28% excise to 14% CGST, but service tax rate increase in other areas gave them a bonanza. Now the states also want a bonanza; going from 18% VAT-on-excise to 14% SGST + 15% cess = 29% wasn't enough, they want 39%? Shameless!

First service tax shot up, now some goods are also over-taxed. Fuel prices are changed daily. LPG subsidy will be phased out. MNREGA budget will get cut even more.

We are perennial natural resources & the government is exploiting us to the hilt & beyond!

[octane_100]

Any chance that people from Ford joined the GST council? This is extremely poor planning. Didn't they realise when they were setting the rates that there is a diiference?

[y2ksrs]

Can this be challenged legally in any court? Will such a litigation even stand a chance?

[volkman10]

Having secured the Goods and Services Tax (GST) Council’s endorsement, the government wants to swiftly amend the law in the ongoing Parliament session itself to raise cess on mid-size, large cars and SUVs.

The vehicles that fall under headings 8702 and 8703 include mid-segment, large cars, racing cars, SUVs and motor vehicles that can carry more than 10 persons, but less than 13 such as station wagons. Also, hybrid vehicles with engine capacity of more than 1,500 cc and mid-segment hybrid cars of less than 1,500 cc fall in the category.

If it is unable to move the amendment this session, an ordinance will be issued. Council has already taken a call on the cess. Attempt now would be to move the enabling amendment soon

Under the new GST regime, cars have been put in the highest tax bracket of 28%. Besides, a cess ranging from 1% to 15% is levied to create a corpus to compensate states for loss of revenue from GST implementation

link


Creates chaos in the Auto industry - All cars more than four metres in length will become more expensive. Now a car, say, the Honda City or the Maruti Suzuki Ciaz, will be taxed at par with a luxury sedan from Mercedes or Audi .

Roland Folger, M.D Mercedes-Benz India :

the increase in cess clubbed with higher road tax in some states would take the effective consumer price much above the pre-GST level. The move will also act as a strong deterrent to the growth of luxury cars in this country and this could potentially impact the future plans of expansion under "Make in India

Rahil Ansari chief of Audi India:

We will be forced to re-evaluate our business plans in light of this development. This move unfortunately is against the spirit of liberal market dynamics and we can only request to reconsider this proposal

ET

[fuelinmyveins]

As far as I can remember, there was a slight correction in the prices of the mid size sedans but surely not to the tune of 10%, though I may be wrong on this.
The increase in the cess seems to be eminent and we can expect following outcomes:-

1. Death of mid size sedan segment in India. We can expect more of under 4m montrosities in the future.

2. Difficulty in launching of global models in India.

3. Diminished confidence of automobile industry in the government's policy, leading to drying up of further investments. Maybe GM took the right call.

4. Bad posturing from the government in the face of various companies reviewing their India strategy. One can assume the following:-

a) Ford cancelling further investments in India especially for new B segment car along with Dragon engine family.

b) Elon Musk will totally ignore India, Tesla will move ahead and set up production basis in China and Thailand for the Asia Pacific region. It's not as if only India is going to use electric cars as it's a technological disruption at a global scale and as of now only Tesla is at the forefront of it.

c) Volkswagen and skoda would pack up and move out of India. As it is MQB A0 is not coming to India and when the domestic sales and exports for the decade old PQ25 based cars dry up, VW and skoda won't have any reason to stay in India.

d) I'm sure that Peugeot is again not coming to India. Maybe Kia will opt out as well.

5. Government's Penny wise pound foolish behavior may backfire. Lower tax per car can easily be substituted by growth in sales and the same can provide the much needed fillip to the struggling Automobile industry which in turn is responsible for a huge share of jobs created and renvenue generated in the manufacturing sector.

In the end the aim of GST was to provide a simple and stable tax structure in which the lower incidence of tax on purchase was to be offset by a growth in demand and consumption leading to cooling of inflation along with increase in revenue collection. The implementation of GST seems to be anything but simple, stable and conducive for growth.

[drashkum]

It so disheartening to see that the yielding cow is being perinnially milked. Just after GST since the price came down, i made a decision to sell my swift and buy a sedan and after TD i zeroed in on New verna or vento and went ahead to pre book verna. Now with the price hike imminent it looks like i cannot wait for verna to launch and have to cancel it and go for vento to cash in the benefits of lowered cess. It is so frustrating for all. I pay lakhs in income taxes and believed that paying proper taxes would give me better returns in terms of better infrastructure. That is never happening. Nothing is transparent in this country. Now this one india one tax GST too looks like a eyewash. It governments motive clearly looks like limited period offer. First decreasing the price to make people believe in GST only to increase it now.

I feel so bad that i voted for this government only to shell out more in taxes.

[romeomidhun]

This is the result when we select people who don't have proper education or minimum common sense but who plays to the gallery. Pease make sure we elect people who have some stability to their head.

I sympathise with the manufacturers who find it difficult to decide on a strategy for beyond one month, and with people who are just fools waiting for ache din happening in their life than in media / social networks. Just take an accoung of what you, as a citizen of India, actually gained than hearing about those days.

Hybrid strategy, tax and cess brackets, petrol/diesel pricing strategy, demonitisation effects... Where will this fiasco end?