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Old 11th September 2017, 11:15   #91
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Quote:
Originally Posted by quadmaniac View Post
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!

Quote:
Originally Posted by Anuruddhs View Post
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

Last edited by benbsb29 : 11th September 2017 at 11:30. Reason: Merged back-to-back posts. Please use the Multi-quote button to reply to more than one post at a time. Thanks.
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Old 11th September 2017, 11:33   #92
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Default Re: Effect of GST on Car Leasing

Quote:
Originally Posted by VaibhaoT View Post
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
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Old 12th September 2017, 02:51   #93
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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.
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Old 13th September 2017, 09:55   #94
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Default Re: Effect of GST on Car Leasing

Thanks for the excellent explanation Anubhav!

Quote:
Originally Posted by anubhav22 View Post
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.
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Old 13th September 2017, 12:14   #95
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Default Re: Effect of GST on Car Leasing

Quote:
Originally Posted by quadmaniac View Post
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!
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Old 19th September 2017, 14:14   #96
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Default Re: Effect of GST on Car Leasing

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
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Old 20th September 2017, 14:37   #97
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Default Re: Effect of GST on Car Leasing

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Originally Posted by motorheart View Post
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?



I personally feel that affected people should form a consortium & fight a legal battle if required.
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Old 27th September 2017, 11:09   #98
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Default Re: Effect of GST on Car Leasing

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.
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Old 3rd October 2017, 23:01   #99
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Default Re: Effect of GST on Car Leasing

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
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Old 3rd October 2017, 23:16   #100
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Default Re: Effect of GST on Car Leasing

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.
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Old 4th October 2017, 15:34   #101
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Default Re: Effect of GST on Car Leasing

Quote:
Originally Posted by naga.sid View Post
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...)
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Old 6th October 2017, 08:30   #102
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Default Re: Effect of GST on Car Leasing

Leased vehicles may get GST relief.
Quote:
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.
Quote:
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

Last edited by volkman10 : 6th October 2017 at 08:32.
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Old 6th October 2017, 12:45   #103
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Default Re: Effect of GST on Car Leasing

Quote:
Originally Posted by volkman10 View Post
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.
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Old 6th October 2017, 16:49   #104
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Default Re: Effect of GST on Car Leasing

Quote:
Originally Posted by yajaman99 View Post
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!
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Old 6th October 2017, 19:49   #105
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Default Re: Effect of GST on Car Leasing

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

Last edited by tortoise : 6th October 2017 at 19:50.
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