[anubhav22]

Originally Posted by quadmaniac

Can you explain this further please? I am one of those whose EMI is shooting up from 14.5% to 45% - and the governments once-a-month lazy meetings are totally worthless. This is a clear case of double taxation and a crime.

Slightly difficult to comprehend but let me try:

1. VAT was applicable on sale of old cars but GST is not.
Please Refer:
http://www.firstpost.com/business/gs...t-3810325.html
and
https://gst.taxmann.com/topstories/1...under-gst.aspx
(further details and how leasing companies are taking this are awaited. Some believe it is only for personal cars)

2. Every car employee leases, give depreciation benefit to employer or leasing company depending on financial lease or operating lease OR how it is on books.
Govt allows 20% depreciation on written down value which is adjusted against companies profit's thus reducing companies taxable income.

Indicative e.g. Taxable income of company = 100L, Tax=35L
First year Depreciation on 20L Car = 4L
New Taxable Income= 96L, Tax= 33.6L; Saving =1.4L
Second year depreciation = 20% of 16L = 3.2L; Saving = 1.12L
and so on.

Many companies give free insurance/road tax/registration/tyre change as a policy of "give it back", probably as they do not want to retain the earnings which are solely due to employee going for lease.
I also know of a big IT company that has absorbed all of tax increase due to GST. In the end, it is all about money

Hope this helps!

Originally Posted by Anuruddhs

Hi Anubhav,
do you have any supporting article for depreciation benefits can be passed by your organisation / leasing company as intended by govt. I am looking for this to pass on to my organisation.

This is company's will to retain or pass the deprecistion benifit to employee as I had mentioned in my preios post.
Leasing companies can also pass on by reducing the interest rate to lower single digit (say in case where leasing companies has the car on it's books)

For Govt's ntend I quote:
"
Government sources told TOI that the leasing companies did not appear to have a strong case as they had claimed depreciation benefit, which negated the impact of the higher tax.
"
from http://timesofindia.indiatimes.com/b...w/60433440.cms

[anubhav22]

Originally Posted by VaibhaoT

I recently got the quote from lease vendor to foreclose the lease. He applied full GST on foreclosure value. Do you have any reference, for above point which I can put forward to the vendor (Orix in my case)?

Foreclosure is slightly different. During foreclosure, the total GST paid at the time of purchase may not have been recovered in emi's. So leasing company will apply based on pending base value. (GST has to be paid atleast once on car value)

That is why people who closed by 30 June are in better situation.

Having said that, all is not lost. Make sure you get the other components sweetend by your organisation like fuel, maintenence, driver etc so as to cover all your costs where you will continue to save tax

[316kmph]

Any idea if there has been any representation to the Finance Ministry on this and who has made the representation?

Mods excuse, if this has already been answered. Thanks.

[quadmaniac]

Thanks for the excellent explanation Anubhav!

Originally Posted by anubhav22

I also know of a big IT company that has absorbed all of tax increase due to GST. In the end, it is all about money

Can you please tell me which company has decided to absorb the GST hikes? I need a reference to approach our firm to at least lessen the blow on us (FTR - our lease provider is also Orix and I am also from Hyderabad).

Would really appreciate this info - thanks - i tried to PM you but I guess PMs are disabled. Feel free to PM me if you don't wish to share publicly.

[anubhav22]

Originally Posted by quadmaniac

Thanks for the excellent explanation Anubhav!



Can you please tell me which company has decided to absorb the GST hikes? I need a reference to approach our firm to at least lessen the blow on us (FTR - our lease provider is also Orix and I am also from Hyderabad).

Would really appreciate this info - thanks - i tried to PM you but I guess PMs are disabled. Feel free to PM me if you don't wish to share publicly.

"The Private Messaging facility is only available to BHPian membership level (and above)"
This prevents "Connecting People"

On the flip side, there are corporate(s) that have done away with this policy all together. (Can't say using this company's reference was one of the reason). Good luck!

[motorheart]

hi All,

Attended CNBC GST live session yesterday, I think we need to escalate the case of double taxation and formally reach out to the Government.

Also request to support the campaign below
https://www.change.org/p/finance-min...ting-car-lease

Regards,
Anzy

[VaibhaoT]

Originally Posted by motorheart

hi All,

Attended CNBC GST live session yesterday, I think we need to escalate the case of double taxation and formally reach out to the Government.

Regards,
Anzy

Hi,

Is this video of the discussion of CNBC?

https://www.youtube.com/watch?v=I1Gw8mc88to

I personally feel that affected people should form a consortium & fight a legal battle if required.

[svkndv]

I am loosing significant amount on this ruthless unprepared implementation of GST on existing leased cars. I am ready to contribute for the legal battle against this illegal double taxation imposed on honest tax payers.

[naga.sid]

There is absolutely no response from the government to tweets. Can someone please help put together a short paragraph defining the issue for me?

While I appreciate that excise was paid during buying the car, it was paid by the leasing company. Which in turn factored it into the monthly payout. And now GST hits the entire EMI instead of the service tax. Have I got this right?

Best regards
SNS

[ptaneja]

We are wasting our time and efforts on this. Better still, do your calculations and see if leasing is profitable vis a vis tax outgo, and then either foreclose or continue with EMI's...govt and their GST council will remain mum spectators on this.

[anubhav22]

Originally Posted by naga.sid

There is absolutely no response from the government to tweets. Can someone please help put together a short paragraph defining the issue for me?

While I appreciate that excise was paid during buying the car, it was paid by the leasing company. Which in turn factored it into the monthly payout. And now GST hits the entire EMI instead of the service tax. Have I got this right?

Best regards
SNS

Everything is/was paid by user.
Since car lease service fell under pervious VAT regime, VAT was applied on whole emi, however majority of states allowed VAT credit based on amount of VAT already paid on ex-showroom price. So effective additional VAT paid was only on interest and leasing charges. (Around 14.5% of 15% = ~2.2%).

Now same cars under GST have lost the credit of VAT.
Since GST has included excise which was already part of base cost in ex-showroom, the total tax incidence has increased rom 14.5% to 31 to 49%

Since GST on leasing is under same category as car, so the emi is getting charged GST BUT with no credit of VAT or excise.

Previous Lease tax = VAT with credit (no excise charged hence no credit needed)
New Lease tax = GST with no credit of VAT and excise

This is double taxation as user has to pay additional 49% GST on total emi amount without 35% excise credit and without 14.5% VAT credit.

Governemnt is very much aware and reluctant to solve this.

Hope this helps.

(P.S.: This also means 15% of interest and lease cost actually become 22.5% with application of 49% GST on it. Ex-showroom GST of 49% will get setoff. This is going to impact the business model for new leases post July01 as well. But some other time...)

[volkman10]

Leased vehicles may get GST relief.

Nearly 100 days after rolling out goods and services tax (GST), the Centre and the states are set to reduce the burden on cars that were leased before July 1 and where the tax rate has risen to up to 50%, apart from reviewing work contracts and several food products such as khakhra and singhada.

rate changes are listed on the agenda for Friday's GST Council meeting, which also includes lower levy on renting of cars for cab services, apart from tightening rules for unbranded cereals, pulses and flours.

link

[yajaman99]

Originally Posted by volkman10

Leased vehicles may get GST relief.

Yes saw this in the TOI, however the scary part is it mentioned "cabs".
So again need to wait and watch.

[quadmaniac]

Originally Posted by yajaman99

Yes saw this in the TOI, however the scary part is it mentioned "cabs".
So again need to wait and watch.

Isn't the cab part mentioned on only the "renting"? For leased, hope they don't differientiate, and treat the corporate employees as rich folks who can afford to pay such a huge tax increase!

[tortoise]

The JK Fin Min just announced on Live TV ( CNBC ) that there is a reduction, but he doesn't remember by how much it is cut down. So there is relief for lease. Fingers crossed