[svkndv]

Has anyone filed a case against this illegal double taxation ? Let me know I am willing to join

[motorworks]

Does car lease still make any financial sense? I have a company leased plan option in my company and I was quite keen before GST kicked in. Now that the GST rates on the monthly emi have been reduced, is it viable considering the offset on income tax?

[vsrivatsa]

Originally Posted by motorworks

Does car lease still make any financial sense? I have a company leased plan option in my company and I was quite keen before GST kicked in. Now that the GST rates on the monthly emi have been reduced, is it viable considering the offset on income tax?

The main people suffering this bad move from the Govt. are the one who took the car on lease prior to GST Implementation as they are hit by double taxation. People who bought cars in the GST Regime are better off but I think even they are hit by the revision in cess etc.

If you take a Car Lease today, it is still viable and would work almost on par with how the scheme was earlier. But now the disclaimer to note is we have a crazy Govt. and they may add more tax any day and the tax gets applied to pre-existing leases as well.

If you are buying a small car then its a safe bet as the impact in that bracket has been in the tolerable limits and may remain untouched for the near future.

[XUVwanderer]

Will the car under Car Lease be considered as "Used Car" during buyback or will have to pay the GST as a new car?

[mustangvins]

Originally Posted by XUVwanderer

Will the car under Car Lease be considered as "Used Car" during buyback or will have to pay the GST as a new car?

I had the same question as well. All lease vehicles have some residual value (20% usually) which we have to pay in the end to close the lease and transfer the car in our name. Now, wondering what rates will apply for this residual value paid in the end. Will it be treated like a second hand sale?

[dextor]

Is there any update on this topic? Earlier there was a news that some people have gathered together and filed a case (followup in telegram group). But since then never heard back on this topic. Anyone aware of the development, please throw some light on this.

[Cooltronics]

Originally Posted by vsrivatsa

If you take a Car Lease today, it is still viable and would work almost on par with how the scheme was earlier.

Not quite really. Previously there use to be 14.5% VAT on Residual Value ( which was 21%) at end of lease term but now its 48% on Residual value of 21% so approx. you are paying 50% more on RV value.
To make perspective more clear, I was seeing a revision of 1.06 Lacs on Creta (ex-showoom 15,00,000) which is approx 2500 INR per month.

VAT regime

RV value @ 21% :15,00,000 *.21 = 3,15,000
VAT @ 14.5% : 3,15,000 * .145 = 45675
Total RV to be paid = 360,675

GST Regime

RV value @ 21% :15,00,000 *.21 = 3,15,000
GST @ 48% : 3,15,000 * .145 = 1.51.200
Total RV to be paid = 466,200

[quadmaniac]

Unless you're thinking of sub 4m, my advice would be to just avoid. Like others said above, you never know what new form of ingenious tax would be applied in the future. What was done to us (ones with existing lease) was borderline illegal, but nobody cares because our strength is too low to be a potent votebank.

[vsrivatsa]

Originally Posted by quadmaniac

Unless you're thinking of sub 4m, my advice would be to just avoid. Like others said above, you never know what new form of ingenious tax would be applied in the future. What was done to us (ones with existing lease) was borderline illegal, but nobody cares because our strength is too low to be a potent votebank.

Yes - as on date this is the only true statement. I am lucky I went for a Small Car - Petrol on Company Lease (Pre-GST). So far the impact for me overall has been something I can ignore after the abatement...

[nsbhagwat]

All,

Do leasing companies lease out car to individuals? If yes which would be a good leasing company? My company does not have a car lease policy.

Mods:- Merge this thread in an appropriate one if posting location is incorrect.

Regards
Nikhil

[DigitalOne]

Originally Posted by Cooltronics

VAT regime

RV value @ 21% :15,00,000 *.21 = 3,15,000
VAT @ 14.5% : 3,15,000 * .145 = 45675
Total RV to be paid = 360,675

GST Regime

RV value @ 21% :15,00,000 *.21 = 3,15,000
GST @ 48% : 3,15,000 * .145 = 1.51.200
Total RV to be paid = 466,200

That isn't quite right. The base value of 15L would be lesser in the GST regime since it doesnt include any tax. In GST ex factory price = ex showroom price

[Cooltronics]

Originally Posted by DigitalOne

That isn't quite right. The base value of 15L would be lesser in the GST regime since it doesnt include any tax. In GST ex factory price = ex showroom price

RV is always calculated on ex showroom price irrespective of GST or VAT.
They calculate 14.5% or 29/44/48% (depending on car size and fuel type) on ex show room price and hence the difference in RV.
What you are saying is correct for EMIs but not on RV.

PS - this is based on actual calculator output of 2 regimes reapectively.

[actinium15]

Originally Posted by DigitalOne

That isn't quite right. The base value of 15L would be lesser in the GST regime since it doesnt include any tax. In GST ex factory price = ex showroom price

Originally Posted by Cooltronics

RV is always calculated on ex showroom price irrespective of GST or VAT.
... this is based on actual calculator output of 2 regimes reapectively.

My concern is same as DigitalOne expressed. Reason: the way GST is being calculated on RV. Do note that ex-showroom price includes GST already, so computing GST on RV (which is a percentage of ex showroom price in the calculations above) is double taxation. It should have been 21% percentage of base price (which is used for computing EMIs) - i.e. ex-showroom-price minus GST.

Is the lease calculator you mention a given leasing company's official one? If so, I'd request you to reach out to leasing company's representative/coordinator for a clarification on the "double taxation on RV" aspect.

If this is one of the myriad calculators available on web, there's a good chance it is wrong.

[Cooltronics]

Originally Posted by actinium15

My concern is same as DigitalOne expressed. Reason: the way GST is being calculated on RV. Do note that ex-showroom price includes GST already, so computing GST on RV (which is a percentage of ex showroom price in the calculations above) is double taxation. It should have been 21% percentage of base price (which is used for computing EMIs) - i.e. ex-showroom-price minus GST.

Is the lease calculator you mention a given leasing company's official one? If so, I'd request you to reach out to leasing company's representative/coordinator for a clarification on the "double taxation on RV" aspect.

If this is one of the myriad calculators available on web, there's a good chance it is wrong.

It is lease company’s calculator. In principle used.
Previously also during VAT rule - VAT of 14.5% was added to RV (21% of ex show room ).
Now, the thing is, outstanding amout at beginning of the lease term (1st month) is stripped of GST value from ex show room price now and previously VAT also used to be stripped BUT it is mandatory that RV has to be 21% so the % reduction of principle amount will not be as steep now as during VAT times but at the end it is anyway going to come at 21% of RV (44th month) and paying GST on it is not double taxation.

[actinium15]

Originally Posted by Cooltronics

It is lease company’s calculator. In principle used.
Previously also during VAT rule - VAT of 14.5% was added to RV (21% of ex show room ).
Now, the thing is, outstanding amout at beginning of the lease term (1st month) is stripped of GST value from ex show room price now and previously VAT also used to be stripped BUT it is mandatory that RV has to be 21% so the % reduction of principle amount will not be as steep now as during VAT times but at the end it is anyway going to come at 21% of RV (44th month) and paying GST on it is not double taxation.

Um, not sure I understand your explanation...I still think computing RV on ex-showroom (which includes GST) is tantamount to double taxation (since you are expected to pay GST on RV at the end of tenure).

For what its worth, I fortunately had the Post GST XLSx prepared by LeasePlan for Maruti Ignis in the month of Aug '17 lying around. LeasePlan provided both pre GST and post GST calculations (since they were in touch for past few months prior to Aug '17 as well).

In the Pre GST calculation, they did compute RV as 29% of the full Ex-Showroom price...

Pre GST:



But in the calculation provided in Aug '17, they listed 29% of base-price (ex-showroom minus GST) as RV (excluding all taxes).

Post GST:



Here's the quote I generated a few minutes ago for Ignis on LeasePlan portal (salaryplan.co.in) illustrating that LeasePlan calculates RV (Estimated Market Value, excluding all taxes) at 29% of base-price, not ex-showroom price.




Based on above, the calculation you shared earlier...

Originally Posted by Cooltronics

GST Regime

RV value @ 21% :15,00,000 *.21 = 3,15,000
GST @ 48% : 3,15,000 * .145 = 1.51.200
Total RV to be paid = 466,200

... Would become:

GST Regime

RV value @ 21% :(15,00,000-GST) *.21 = 10,13,513 * .21 = 2,12,837
GST @ 48% : 2,12,837 * .48 = 1,02,162
Total RV to be paid = 3,14,999

If you are currently in the process of buying vehicle on lease, I'd highly recommend reaching out the lease representative for clarification of RV computation shared with you.