[mtnrajdeep]

I took a leased car recently and the lease company has done the following

1. Base price (excluding GST) is considered as financed amount
2. EMI amount calculated on financed amount
3. GST (same as car GST %) applied on EMI amount.
4. Residual value is on financed amount and GST is applicable on that
5. Car is in company name and lease payment deducted from pre-tax income.

[DCEite]

Originally Posted by mtnrajdeep

I took a leased car recently and the lease company has done the following

1. Base price (excluding GST) is considered as financed amount
2. EMI amount calculated on financed amount
3. GST (same as car GST %) applied on EMI amount.
4. Residual value is on financed amount and GST is applicable on that
5. Car is in company name and lease payment deducted from pre-tax income.

Yes this is exactly how it's done.

Additionally:

1) Car is in name of your organization and hypothecated to the leasing company till the lease period

2) You get tax benefit upto a certain limit (varies from company to company) on the fuel and maintanence component.

3) Yearly insurance is paid by the leasing company on behalf of organization until the lease period is over.

[thanixravindran]

Originally Posted by mtnrajdeep

I took a leased car recently and the lease company has done the following

1. Base price (excluding GST) is considered as financed amount
2. EMI amount calculated on financed amount.

How much is the interest charged now by lease company? Is it same as car loan market interest rate?

[mtnrajdeep]

Originally Posted by thanixravindran

How much is the interest charged now by lease company? Is it same as car loan market interest rate?

Interest is 10.55%. i think it is higher than normal car loans but there are aspects of maintenance, insurance, fuel allowance, driver allowances that sweeten the deal.

[vivekrvcse]

What happens at the end of the lease period?

How much is the residual value?

What if you buy at 10L as Residual value and sell for 30L? Pay tax on 20L?

[pmbabu]

Originally Posted by pmbabu

48% (14% + 14% + 20%) on finance, and 18% (9% + 9%) on fleet management are the taxes on EMI components.

And 48% (14% + 14% + 20%) tax on buyback value.

The %ages above are for a SUV (for your reference).

Update: RV / Residual Value seems to vary from company to company. With GST it seems to be in the range of 34-40% of the ex-showroom price.

That's a high variation - for cars around 25 lakhs ex-showroom, the difference would be in the range of 1.5 lakhs!

[SDx]

Originally Posted by DCEite

1) Car is in name of your organization and hyothenticated to the leasing company till the lease period

In my organisation, car is now in employee's name. Earlier it used to be this way. A very welcome move.
No hassle of RC transfer, easier to sell at the end of the lease.

Or, keep it for 10 years as we promote on this forum .

Originally Posted by DCEite

3) Yearly insurance is paid by the leasing company on behalf of organization until the lease period is over.

Insurance is dedicated from my salary, I claim it back under maintenance.

Originally Posted by vivekrvcse

What happens at the end of the lease period?

How much is the residual value?

For us, residual can be either be 1% or 10% of the financed value. I am on my third car lease, choose 10% under my first lease, never after. At the end of term 10% seems a bit too high for an old car.

Sold both cars, first one directly to someone through OLX. Second one through cars24, earlier this year. This one, I had to get transferred in my name first.

[TECHNOGIRISH]

Hi folks,

Has anyone taken a company lease to buy an EV? I want to understand the net GST variance in the lease rental in the case of EV compared to an ICE car. Will appreciate some insights on the same.

Thanks!

[Love4Cars]

GST applicable for any car in lease is same as on ex-showroom. Hence, in case of an EV it will be 5% GST. For EMIs it doesn't matter if the GST is 48% or 5% as you are just paying EMI in form of Pre-tax deduction.

However, depending on Residual Value (RV), GST may have an impact on your car buy back. For an Ex showroom 20L car with 5% as RV, you will need to pay 1L + 48% GST for an SUV vs 1L + 5% GST for an EV.

Hence, lower your RV at the end of lease term, lower the impact of GST. Do keep in mind that you don't get to claim fuel reimbursement in case of EV, which impacts how much you save on taxes, but iy does lower your running costs too.

[SafeDrive0107]

I am exploring the option of car lease with my organization. Car will be registered in my name. I am stumped by the GST calculation on the residual value.

Residual value is considered as 25% of ex-showroom cost. Now ex-showroom cost includes base price + 43% tax (GST + Cess). All calculations till here are very clear.

When I look at the residual value payable at the end of lease period, they have calculated it as 25% of ex-showroom + 43% tax on the residual value. This is the confusing part.

The ex-showroom cost already has a tax component included, is it correct to again calculate the same 43% tax on it? Something seems off.

Basic cost of Car - 21,91,608
GST + Cess @ 43% - 942,392
Total Ex-Showroom: 31,34,000

Residual Value @25% - 7,83,500
GST + Cess @ 43% - 336,905
Total RV payable with taxes - 11,20,405

Not sure if I am missing something here.

[mrkireeti]

Originally Posted by SafeDrive0107

I am exploring the option of car lease with my organization. Car will be registered in my name. I am stumped by the GST calculation on the residual value.

Residual value is considered as 25% of ex-showroom cost. Now ex-showroom cost includes base price + 43% tax (GST + Cess). All calculations till here are very clear.

When I look at the residual value payable at the end of lease period, they have calculated it as 25% of ex-showroom + 43% tax on the residual value. This is the confusing part.

The ex-showroom cost already has a tax component included, is it correct to again calculate the same 43% tax on it? Something seems off.

Basic cost of Car - 21,91,608
GST + Cess @ 43% - 942,392
Total Ex-Showroom: 31,34,000

Residual Value @25% - 7,83,500
GST + Cess @ 43% - 336,905
Total RV payable with taxes - 11,20,405

Not sure if I am missing something here.

I am considering something very similar and hence looking for replies on this post.

[SatheeshP]

Originally Posted by SafeDrive0107

Residual value is considered as 25% of ex-showroom cost. Now ex-showroom cost includes base price + 43% tax (GST + Cess).

Residual Value must be on the basic cost of the car (21,91,608) and then add the GST + Cess on that.

So the residual value is 547902 and then add GST+Cess on that value. This is how it is calculated by Royal Sundaram finance.

[SafeDrive0107]

Originally Posted by SatheeshP

Residual Value must be on the basic cost of the car (21,91,608) and then add the GST + Cess on that.

So the residual value is 547902 and then add GST+Cess on that value. This is how it is calculated by Royal Sundaram finance.

I got clarification from the lease provider. So this is how they are doing it, while calculating the monthly instalments payable, GST+Cess is not added, it’s only the base amount of the car. Whatever the monthly instalment amount 43% GST+ Cess is being added to that… which means at the end of the lease period GST +Cess is paid only for the base amount - residual value.
At the end of lease when you buy back the car, you pay 25% of base amount + 43% as GST + Cess on it. It is now clear to me that I am not paying the GST+Cess twice on the residual value.

[shb19]

Hi, could anyone guide on if tax benefits is applicable or not under the new tax regime?

[Twiny]

Originally Posted by shb19

Hi, could anyone guide on if tax benefits is applicable or not under the new tax regime?

Car lease rental to the leasing company is paid directly by the employer. This amount would not be taxable in the hands of the employee. Hence the benefit is applicable irrespective of the tax regime.