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-   -   GST cess on midsize sedans, SUVs & luxury cars hiked (https://www.team-bhp.com/forum/indian-car-scene/189880-gst-cess-midsize-sedans-suvs-luxury-cars-hiked-5.html)

You may be right about the Income Tax and expenditure tax (GST, cess etc) from the definition perspective.

However the "We pay income tax" unfortunately just applies to as little as 1 to 2% of our population and it is mostly the salaried class.

If it is only the salaried class (as a major percentage) who is going to end up paying income tax and then expenditure tax (GST, cess and what not), then it is only fair to abolish personal income tax all together and just have tax on expenditure for all the people of our country. This will save the 1% of the tax payers from double(unjust)-taxation.

Atleast all individuals who have paid personal income tax should be entitled to a reduced tax on GST, cess and all other expenditure based tax. Taxation has to be fair for everyone.

We are in agreement on one point. And I'm afraid we are again going:OT

A majority of our country's income tax payers are those who are unable to evade taxes or conceal their incomes. Salaried people are forced to be honest, while those with other sources of income may escape paying taxes.

But the remedy to that should in detecting dishonest tax evaders, collecting taxes from them, and punishments being met out to them. (Personally I recommend mandatory prison terms equivalent to corruption cases to tax dodgers.)

Tax is not some loyalty programme for handing out bonus points to repeat payers. It is a citizen's duty and one of the basic premises to his constitutional rights. He should be "honest by default" (for want of a better term). A citizen obeys the law not expecting to be rewarded, but to serve the larger interest of the society he lives in, and which defines his very existence.

So to solve the problem you mentioned, Sir, the remedy is in strict enforcement and punishments stiff enough to provide effective deterrence.

The GST laws contain a provision on anti-profiteering as a deterrent for the industry to keep the additional profits which may arise out of GST implementation. The law in-fact makes it mandatory to pass on the benefit due to the reduction in tax rates or from input tax credit to the consumer by way of a similar reduction in prices.

When the manufacturers have followed the law in spirit and have passed on the benefits to the consumers, the government has promptly increased the cess. This kind of policy-making suits neither the consumers nor the industry. This is profiteering by the government and is neither aligned with the object of improving the ease of doing business or eliminating the tax on tax.

Coupé

After GST implementation, I thought that Octavia is within my reach but now it will be a dream. The trial and error type of functioning by RBI and Ministry of Finance has resulted in a lowest GDP since 2014. This kind of frequent reversal of policies may lead to severe economic crisis.

If I were to buy a car whose ex-factory price is Rs20 lakhs, what should be my income beforeI pay income tax (assuming I'm a salaried individual, buying the car for personal consumption)?

The Income Tax calculator suggests Rs48.50 lakhs, for which Income Tax payable is Rs13.20 Lakhs. With my after-tax income of Rs35.30 Lakhs, I could buy the car at ex-showroom (20*1.53 = 30.60 Lakhs) and pay Rs4.60 lakhs road-tax (15% of ex-showroom in TN).

The break-up of my income:
49% towards Income Tax & GST
9.5% towards Road-Tax
41.2% towards the price of the product I've actually consumed.

At a dinner last night, one person in the group was what you'd call an 'expert in politics'. I asked him of the reason behind this indecisiveness. He said that it's about the image & message sent out by the government. The aam junta doesn't look favourably upon owners of big / pricey cars. Now, the GST making luxury cars cheaper led to 2 things:

1. The masses angered by the fact that the rich will buy their goods cheaper.

2. Perception that the government supports the rich.

As other BHPians have commented, the tax gain from this hike to the kitty might not be as much. But lowering taxes on luxury goods is political suicide. How can a Mercedes become cheaper (in % terms) than a Maruti Alto??

Whatever the reason, someone should have thought this through before. Arbitrarily changing taxes like this does no one any good. In effect, big cars have gone through 3 tax changes in as many months :Frustrati.

Turns out it was the govt. that needed an anti-profiteering clause more than private industry. Who would've thought.lol:

Why can't they raise the TDS cess to say 25-30% and charge TDS on all new cars regardless of value. Why should someone be allowed to use black money to buy cars under even 10 lakh rupees ?

The government has to come up with such harsh but ingenious ideas to tackle tax evasion and trap money from tax evaders.

Hope they define luxury as vehicles above 20 lakh rupees (or atleast 10 lakh rupees) as mentioned in the report.

Vehicles like the Verna / City are no way a luxury while the BMW /Audi/ Benz or even Fortuner and Endeavour are luxurious and hence it's fair to an extent to raise taxes.

Will be a real tragedy of the government considers all 4m+ vehicles as luxurious.

That leaves you with the grand sum total of Rs.10,000 to spend for all your other domestic expenses. I doubt you could afford food even at the Parliament Canteen if you were a sitting MLA with that money.

Governments are always out to make a quick buck out of ordinary citizens. Easily ascertained by the hike in tax and cess for fuel. It fills their coffers and enables them to siphon off large volumes of money through gargantuan projects with no real benefit to the common man. Two statues come to mind.

I think the point was to increase the tax revenue. So far, I can see about 95% of the products have higher tax after GST implementation and in turn got more expensive. Don't get me wrong, I am in full favor for having a standard tax bracket as GST/VAT through out the country (ala 20% VAT in EU, NZ etc). But we have 5 different bracket rates for GST, and things that have higher tax rate than 28% were either left out of scope or attracted cess.

Another question I always had : The Govt thinks SUV are sin goods, so why do we see all the Politicians and ministers with Fortuners etc ? Shouldn't they promote a better image with smaller cars ?

If the Govt really wanted to enforce extra tax/cess for environmental reasons, they should have had car categorisations based on emissions and fuel economy not length and engine of the car !!

In a nutshell explains the history of policy making in this country and may i add what is basically wrong with policy making in our country.

But I feel the present govt. atleast recognizes this baggage and they have shown instances of creativity around it.

Very true about the present government's attempts @rrsteer. Its a different matter whether they are getting it right or wrong most of the times. Thats for people to decide in 2019 anyway.

The problem is - they made error in calculation once. And then to correct it, they made an error in calculation once again. Probably a bigger one.

Its a traditionally accepted fact that the middle / upper middle class votes for the NDA mostly. Now this class is in the bracket in general who aspires to own a sedan or something similar that costs upwards of 10 lakhs upto 15L. While trying to appear to charge the rich more, they have ended up taxing exactly the people who voted them to power more. Directly cracking these people's aspirations / dreams. This class now has a dilemma about getting a new home as homes are ultra costly. The next thing they look at for a fresh experience in life is a CAR.

And its a big deja vu infact. One of the primary mistakes in the previous NDA government (Vajpayee era) was the reforms that they brought in finances all hit their own voters hard. The tax payers got milked further.

The way I see it - these guys have a positive idea somewhere in the mind possibly. They want to correct a lot of things - which are possibly broken since 70 years. They try to do it all in 5 years without thinking long term. The effect is a large sequence of big changes that get highlighted to the general public & many times are not easy on the one thing that the people care about. The money left in their account. They do a lot of good things in these 5 years. But its the BAD things that people remember. The good things are anyway a government's duty.

Add to the mix the person who signs as the minister like this instance and we have what we have got now with the CESS.

One mistake in understanding how "masses" should be defined & the next vote comes with surprises in India.

This is going to be one of the most remembered fiascos by governments in recent times & surely we should be starting to get whatsapp / other social media memes about this back and forth.

Whatever the reason or politics behind this (in)decision, the fact that our roads are already overpopulated and the fact that our environment is at the brim of a collapse stands tall staring us. IMHO, any decision that helps to lower the number of private vehicles on road should be welcome. Let us buy used cars to overcome cess and let us talk about lateral upgrades to satiate the enthusiast in us.

It is a sad state of affairs and does send a wrong message. Currently the only way you could convey something to the govt is by organizing a bandh, burning down a few shops, blocking the highways etc. Those who don't do these things do not even exist for the govt.
Taxation is theft. However we try to justify taxes by calling it a duty, any money taken from us against our will is theft. The money taken away from us goes into a big black hole where there is zero accountability. When elections are won by engineering riots, nobody even cares about what happened to the tax they paid.

Any idea from when cess hike is applicable ?
Will it be immediately after sept 9th GST council meeting ?