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Old 6th October 2017, 20:48   #106
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So finally some much awaited announcement by FM on reduction of GST rate on existing lease cars - in transitional state (purchased before 1st July).
35% Abatement on the Lease Charges - 65% of lease charges would have to be paid. more clarity awaited
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Old 6th October 2017, 20:49   #107
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Default Re: Effect of GST on Car Leasing

The revenue secretary said this:

To take care of the transitional lease cases (more than an year old, who couldn't claim the input tax credit), there will be a 35% reduction in the leasing charges, which includes cess amount.

This is a vague statement. It didn't answer what happens to the car leases taken within 12 months before the GST implementation? Can they take input tax credit (ITC) and pass on the benefit to the end user?

EDIT:
Here is my understanding:
If GST (28%) + Cess (15%) is 43% currently, it is reduced by 35% to 27.95%, for cars leased before 01-Jul-2017.

Last edited by Voyager-1 : 6th October 2017 at 21:14.
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Old 6th October 2017, 21:22   #108
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Default Re: Effect of GST on Car Leasing

The revenue secretary added 1.7

So all pre GST car leases are covered according to my understanding.

Link

In addition, if I am right, the companies had represented to remove the cess. As of now it is a three equal parts of CGST+SGST+Cess. With cess removed it comes to 65%.

Hence the overall impact will be equal to one additional part of pre-GST VAT from an overall sense.

Could be wrong.

Best regards
NS

Last edited by naga.sid : 6th October 2017 at 21:28. Reason: Included a link for referencing
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Old 6th October 2017, 22:14   #109
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Default Re: Effect of GST on Car Leasing

Quote:
Originally Posted by Voyager-1 View Post
The revenue secretary said this:

To take care of the transitional lease cases (more than an year old, who couldn't claim the input tax credit), there will be a 35% reduction in the leasing charges, which includes cess amount.

This is a vague statement. It didn't answer what happens to the car leases taken within 12 months before the GST implementation? Can they take input tax credit (ITC) and pass on the benefit to the end user?

EDIT:
Here is my understanding:
If GST (28%) + Cess (15%) is 43% currently, it is reduced by 35% to 27.95%, for cars leased before 01-Jul-2017.
Quote:
Originally Posted by Cooltronics View Post
So finally some much awaited announcement by FM on reduction of GST rate on existing lease cars - in transitional state (purchased before 1st July).
35% Abatement on the Lease Charges - 65% of lease charges would have to be paid. more clarity awaited
Hello,

Glad to read that there is some relief for the leased car. Though I think, we will be still penalized compared to VAT regime.

Do you have any reference for this decision? I tried to search, but could not find anything for the leased car.

Thanks!

Last edited by VaibhaoT : 6th October 2017 at 22:32.
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Old 6th October 2017, 22:18   #110
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Default Re: Effect of GST on Car Leasing

Quote:
Originally Posted by Voyager-1 View Post
The revenue secretary said this:

EDIT:
Here is my understanding:
If GST (28%) + Cess (15%) is 43% currently, it is reduced by 35% to 27.95%, for cars leased before 01-Jul-2017.
How does it apply to a small petrol car:

GST (28%) + Cess (1%) is 29%, reduction by 35% = 18.85%
I hope you are correct
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Old 6th October 2017, 22:37   #111
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Default Re: Effect of GST on Car Leasing

Quote:
Originally Posted by VaibhaoT View Post
Though I think, we will be still penalized compared to VAT regime.
Looks like I would be paying 20.15% GST, which was earlier kept as 31% (28 + 3) for my TUV3OO. About 5% more than VAT + Service Tax regime.

Quote:
Originally Posted by VaibhaoT View Post
Do you have any reference for this decision? I tried to search, but could not find anything for the leased car.
Please see the below video, at 30:30 point, car lease decision is announced.

Revisions to GST - Highlights

Last edited by airbus : 6th October 2017 at 22:42. Reason: Minor correction.
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Old 6th October 2017, 22:41   #112
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Default Re: Effect of GST on Car Leasing

Since most states allowed VAT credit, in pre-GST regime, only additional VAT paid was mainly on lease interest. So 14.5% VAT on 14% interest = ~2% tax
Now this increased to 29% to 49% in GST regime as no VAT or excise credit available in GST regime.
This likely comes down to 18.85% to 31.85% with today's announcemnt.
So from 2% to now 19-32%
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Old 6th October 2017, 22:49   #113
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Default Re: Effect of GST on Car Leasing

Someone has to explain in simpler terms, till the time I hear something back from my leasing company.

:(
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Old 6th October 2017, 22:59   #114
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Default Re: Effect of GST on Car Leasing

Quote:
Originally Posted by ptaneja View Post
Someone has to explain in simpler terms, till the time I hear something back from my leasing company.

:(
As per best of my understanding, we should get the discount of 35% in GST rate.
e.g.: Current applicable GST rate for my car is 50%. So I should get the discount of 35% & effective rate should be 32.5%.
If I am missing something, someone please correct me.
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Old 6th October 2017, 23:15   #115
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Default Re: Effect of GST on Car Leasing

Check out this tweet https://twitter.com/CBEC_India/statu...45945926832128 from CBEC. Look at sections 4.1 and 4.2. Still almost double of whatever tax was paid before GST for bigger cars/SUVs. For small cars, it works out to around 18.6%.

Only question is, will we get back the higher taxes paid since July from the leasing companies?
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Old 6th October 2017, 23:33   #116
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Default Re: Effect of GST on Car Leasing

Quote:
Originally Posted by sanchari View Post
Check out this tweet https://twitter.com/CBEC_India/statu...45945926832128 from CBEC. Look at sections 4.1 and 4.2. Still almost double of whatever tax was paid before GST for bigger cars/SUVs. For small cars, it works out to around 18.6%.

Only question is, will we get back the higher taxes paid since July from the leasing companies?
LeasePlan guys had promised that they would refund the money if Govt. were to change the decision and reduce taxes. Legally they would have to is my understanding...
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Old 7th October 2017, 00:57   #117
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Default Re: Effect of GST on Car Leasing

Quote:
Originally Posted by sanchari View Post
Check out this tweet https://twitter.com/CBEC_India/statu...45945926832128 from CBEC. Look at sections 4.1 and 4.2. Still almost double of whatever tax was paid before GST for bigger cars/SUVs. For small cars, it works out to around 18.6%.

Only question is, will we get back the higher taxes paid since July from the leasing companies?
Whats also alarming is the fact that these rates are applicable only for 3 years starting from July 1st, 17. What will happen after 3 years? My car lease period is still valid for another 4 years.

But this is a welcome change. I now need to pay only 31.2% as against 48% for my Crysta taken under car lease, effectively reducing the additional EMI burden from 11k to 5.6k. Another important thing to note is the same 65% is applicable even for preclosure cases too.
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Old 7th October 2017, 02:50   #118
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Default Re: Effect of GST on Car Leasing

Is there any logic behind 35% abatement? I fail to understand with what calculation have they arrived at figure of "35"? Even with 35% reduction we will still be paying double the amount compared to VAT.
Or does it mean that additionally the leasing company can claim back VAT(only) amount through ITC & that will be passed on to customers as well?
I said VAT only because all other taxes are not possible to claim under ITC because of complexity & paper work involved.
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Old 7th October 2017, 11:30   #119
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Default Re: Effect of GST on Car Leasing

Well, inspite of knowing that existing lease car owners are double charged or rather triple charged or more (14.5% to 50%), GST council gives a partial relief on the actual unethical practise.
More of psychology than business - you paid 14.5% and are then tortured to pay 50% and then govt says we are doing a favour by reducing it to 32%.
You are happy as you save something but still overall you pay double of what you were supposed to pay.
Someone asked, how did they arrive at 35% - I believe the answer is in reduced tax mop up on Khakras Chevdas etc. which they gave yesterday and to balance it somewhere

Last edited by GTO : 4th December 2017 at 10:38. Reason: Language
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Old 7th October 2017, 13:01   #120
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Default Re: Effect of GST on Car Leasing

I am shocked at the attitude of this Govt. They are now acting as if they have done us a great favour even though we still end up paying twice the tax we used to pay before GST came to effect.
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