Effect of GST on Car Leasing

XUVwanderer · 1st July 2018, 15:28

What I have seen from the calculation sheet provided by Clix for one of my friend who pre-closed recently is that GST is not charged on buyback or residual value.

dextor · 4th July 2018, 22:35

Came to know form some one that the court case on the GST on lease car has reached Delhi High court and next hearing is on 27th Jul.
I am not sure how true it is but if someone is aware, please confirm.

Behemoth · 5th July 2018, 07:16

Quote:

Originally Posted by XUVwanderer

What I have seen from the calculation sheet provided by Clix for one of my friend who pre-closed recently is that GST is not charged on buyback or residual value.

Not correct. Clix is charging full GST including compensatory cess on the asset buyback value and residual value. I checked my own.

mustangvins · 5th July 2018, 12:04

Orix is charging the full GST applicable with cess after abatement on the RV.

For taxation purposes, should this not be considered the same as a second hand car sale? The applicable rate for used car from what i know is only 12% or 18% depending on the type of car. Can someone clarify how taxation on RV for a leased car is different from that of a used car sale?

Anuruddhs · 8th July 2018, 19:58

Quote:

Originally Posted by dextor

Came to know form some one that the court case on the GST on lease car has reached Delhi High court and next hearing is on 27th Jul.
I am not sure how true it is but if someone is aware, please confirm.

Yes, thats true. I am one of the petitioner in the case. I was also follwing up with tax research unit in MoF but they were not supportive inspite aceepting the fact that what is being done is wrong. Next hearing is on 27th july. Court has already given instruction that if we win the case government has to refund all the extra money collected with interest. Court instructed govt lawyer to file reply in 4 weeks and we were supposed to file rejoinder in 4 weeks but govt has not replied yet and next hearing is almost on way. Govt is not replying as they are in fault here and want to delay the case.
Lets see what happens in next hearing.

naga.sid · 30th July 2018, 23:34

Hi,

Is there any positive update for us on the case? Do hope the courts see the double taxation aspect and reverse the decision.

Not only that, the interim waiver applies only for three years. What happens to those who have taken the cars for five years!

Best regards,
Siddharth

devyaaniverma · 25th October 2018, 12:36

Hello Everyone,

Iam wondering with the advent of GST is it still worth going for a leased car ? A person i know took car on lease 4 years back, its coming to an end now, and there has been substantial increase in rent right from the time GST came into the picture, as mentioned by him.

Iam no expert here, but what do the expert voices say? If you are already under a lease plan, is it worth continuing ? Does the buyout option actually benefit?

The entire leasing process personally confuses me a lot.

Any voices with personal experiences do respond.

Regards,
Devyaani.

scywaulcher · 5th November 2018, 17:00

I am suffering because of the change to GST. I had taken an XUV 500 through CLC in OCt 2016 and have to pay 48 % tax !

Now I need to quit my job and have to foreclose the lease. Kotak Prime wants me to pay full GST without the 35 % discount. The reason they give is that the reduction is given if no input credit has been availed for VAT and Service tax, and since the leasing company Kotak has availed this benefit, I have to pay full GST.
How is this fair ?

dextor · 19th November 2018, 19:01

Can someone share updates on this ongoing case. Looks like since July nothing has moved.

Turbanator · 11th February 2019, 14:13

Is this going to affect Leasing? I am not able to understand completely.

rovingeye · 11th May 2019, 09:33

Quote:

Originally Posted by Anuruddhs

Yes, thats true. I am one of the petitioner in the case.

Next hearing is on 27th July. Lets see what happens in next hearing.

Hi - Has there been any update on this case? Please let the community know.

Anuruddhs · 12th June 2019, 18:29

Quote:

Originally Posted by rovingeye

Hi - Has there been any update on this case? Please let the community know.

Case is still ongoing in Delhi high court, They have send some lame documents to make fool in last hearing which we need to oppose and file reply before August. Also GST council member called last week and asked us to send our issue as they might take it in July budget. Wait is only option and we will keep pursuing the case.

spr1ngleo · 1st August 2019, 20:17

I took Celerio zxi amt on lease in 2016 (pre-gst). With the advent of GST, I had my EMI shot up by 2k and RV by 20k approx. This for a engine with 1000cc. Now I am done with the lease, and paid all my dues including RV. Planning to buy another car (<1200cc engine) from the same company approved lease company. Is this deal still attractive method to save on tax ( and also cater to car enthusiasts)?

anubhav22 · 12th August 2019, 16:07

Quote:

Originally Posted by spr1ngleo

I took Celerio zxi amt on lease in 2016 (pre-gst). With the advent of GST, I had my EMI shot up by 2k and RV by 20k approx. This for a engine with 1000cc. Now I am done with the lease, and paid all my dues including RV. Planning to buy another car (<1200cc engine) from the same company approved lease company. Is this deal still attractive method to save on tax ( and also cater to car enthusiasts)?

You have to figure it out based on GST on car you plan to buy and/or plan to retain/sell thae car after lease and/or fuel/maintenence/driver limits in your organisation/your consumption.

Just the lease is no longer as benefitial as earlier for mid/high end cars, considering the GST on interest and leasing charges is same as GST on car (upto 53%). So a 12.5% interest and 2% leasing charges become ~22% effectively. Also there is monthly perquisite plus another ~7% of perquiste tax if you decide to buy the car in your own name after lease period end. This kills all ~30% tax saving and you might be a second owner.

However if you were to buy a car in any case and/or you plan to sell the car immediately after lease end and/or these fuel/maint/driver limits in your org are good enough to cover your expenses, go for it (0% effecive rate under lease is still better than ~8% interest rate from bank)

spr1ngleo · 18th August 2019, 00:42

Quote:

Originally Posted by anubhav22

You have to figure it out based on GST on car you plan to buy and/or plan to retain/sell thae car after lease and/or fuel/maintenence/driver limits in your organisation/your consumption.

Just the lease is no longer as benefitial as earlier for mid/high end cars, considering the GST on interest and leasing charges is same as GST on car (upto 53%). So a 12.5% interest and 2% leasing charges become ~22% effectively. Also there is monthly perquisite plus another ~7% of perquiste tax if you decide to buy the car in your own name after lease period end. This kills all ~30% tax saving and you might be a second owner.

However if you were to buy a car in any case and/or you plan to sell the car immediately after lease end and/or these fuel/maint/driver limits in your org are good enough to cover your expenses, go for it (0% effecive rate under lease is still better than ~8% interest rate from bank)

Thank you. I am eyeing at Nexon petrol XT+. Not sure if that's really a high end car. Driver salary of 18k, fuel reimbursement of 15k, an EMI of 26k, at 18% residual value. I will buy back the car at end of 36 months, and plan to keep it for its lifetime. Your opinion please?

TIA.

1st July 2018, 15:28	#151
XUVwanderer Newbie Join Date: Apr 2016 Location: Bangalore Posts: 11 Thanked: 14 Times	Re: Effect of GST on Car Leasing What I have seen from the calculation sheet provided by Clix for one of my friend who pre-closed recently is that GST is not charged on buyback or residual value.
	() Thanks

4th July 2018, 22:35	#152
dextor BHPian Join Date: Aug 2016 Location: Bangalore Posts: 167 Thanked: 320 Times View My Garage	Re: Effect of GST on Car Leasing Came to know form some one that the court case on the GST on lease car has reached Delhi High court and next hearing is on 27th Jul. I am not sure how true it is but if someone is aware, please confirm. Last edited by dextor : 4th July 2018 at 22:35. Reason: Missed some detail
	() Thanks

5th July 2018, 12:04	#154
mustangvins BHPian Join Date: Jul 2015 Location: Hyderabad Posts: 60 Thanked: 77 Times	Re: Effect of GST on Car Leasing Orix is charging the full GST applicable with cess after abatement on the RV. For taxation purposes, should this not be considered the same as a second hand car sale? The applicable rate for used car from what i know is only 12% or 18% depending on the type of car. Can someone clarify how taxation on RV for a leased car is different from that of a used car sale?
	() Thanks

30th July 2018, 23:34	#156
naga.sid BHPian Join Date: May 2011 Location: BANGALORE Posts: 70 Thanked: 51 Times	Re: Effect of GST on Car Leasing Hi, Is there any positive update for us on the case? Do hope the courts see the double taxation aspect and reverse the decision. Not only that, the interim waiver applies only for three years. What happens to those who have taken the cars for five years! Best regards, Siddharth
	() Thanks

25th October 2018, 12:36	#157
devyaaniverma BHPian Join Date: Dec 2013 Location: Delhi,Mumbai Posts: 65 Thanked: 46 Times	Re: Effect of GST on Car Leasing Hello Everyone, Iam wondering with the advent of GST is it still worth going for a leased car ? A person i know took car on lease 4 years back, its coming to an end now, and there has been substantial increase in rent right from the time GST came into the picture, as mentioned by him. Iam no expert here, but what do the expert voices say? If you are already under a lease plan, is it worth continuing ? Does the buyout option actually benefit? The entire leasing process personally confuses me a lot. Any voices with personal experiences do respond. Regards, Devyaani.
	() Thanks

5th November 2018, 17:00	#158
scywaulcher Newbie Join Date: Dec 2007 Location: Bangalore Posts: 8 Thanked: 6 Times	Re: Effect of GST on Car Leasing I am suffering because of the change to GST. I had taken an XUV 500 through CLC in OCt 2016 and have to pay 48 % tax ! Now I need to quit my job and have to foreclose the lease. Kotak Prime wants me to pay full GST without the 35 % discount. The reason they give is that the reduction is given if no input credit has been availed for VAT and Service tax, and since the leasing company Kotak has availed this benefit, I have to pay full GST. How is this fair ?
	() Thanks

19th November 2018, 19:01	#159
dextor BHPian Join Date: Aug 2016 Location: Bangalore Posts: 167 Thanked: 320 Times View My Garage	Re: Effect of GST on Car Leasing Can someone share updates on this ongoing case. Looks like since July nothing has moved.
	() Thanks

11th February 2019, 14:13	#160
Turbanator Team-BHP Support Join Date: Mar 2011 Location: Gurgaon Posts: 6,716 Thanked: 28,320 Times	Re: Effect of GST on Car Leasing Is this going to affect Leasing? I am not able to understand completely. Attached Thumbnails
	() Thanks

1st August 2019, 20:17	#163
spr1ngleo BHPian Join Date: Jul 2019 Location: PUNE Posts: 146 Thanked: 68 Times	Re: Effect of GST on Car Leasing I took Celerio zxi amt on lease in 2016 (pre-gst). With the advent of GST, I had my EMI shot up by 2k and RV by 20k approx. This for a engine with 1000cc. Now I am done with the lease, and paid all my dues including RV. Planning to buy another car (<1200cc engine) from the same company approved lease company. Is this deal still attractive method to save on tax ( and also cater to car enthusiasts)?
	() Thanks