[avisidhu]

Originally Posted by Aaron:)

Just a little perspective -

I bought my Honda City S M/T in 2009 for about 9 lakh on road. If you adjust inflation, the 9 lakh comes up to approx 15 lakh. I think you can get a Honda City (top-1 variant) for that much today.

And therein lies the issue. Since our salaries have grown since then, we now expect to move up the value chain. In the same situation, I would now 'aspire' to own a D segment vehicle. But since my subconscious mind is still stuck on the old prices, I expect a Jetta or (new) Civic be made available at 15 odd Lakhs. When that does not happen, we lament that the car prices have gone through the roof.

In fact, there might have been far few obligations at the time, and maybe I am still able to afford the same 10L price point. Which would get me the Swift, and would thus make me even more depressed!

(No offence meant please, just putting this in respect to segment. The swift is a wonderful car!)

I'm not sure if this holds true for everyone, and thankfully a lot of us have certainly matured enough to not consider change of car as a means to display our enhanced purchasing power. But to a vast majority that does, this entire scenario certainly pinches. As it does to enthusiasts who aspire for enhanced performance and features.

[ashlil]

Originally Posted by Aroy

-SNIP-

What you have not factored in, is that GST is applicable to all, including Creta. Without GST a car of 18L ex-showroom will be 12.59L (18/1.43)

So we are talking of 13L each if there was no import duty.

You are absolutely right in your computation. But, the question still is, would you buy a Creta if Mercedes A class was available for the same price? (Again, not considering the fact that if A class were locally built, it would be cheaper still)

[Aroy]

Originally Posted by ashlil

You are absolutely right in your computation. But, the question still is, would you buy a Creta if Mercedes A class was available for the same price? (Again, not considering the fact that if A class were locally built, it would be cheaper still)

Not really. If I wanted SUV then Creta. If sedan then of course C or E - which will by your calculations be quite reasonably priced. But cnsidering the maintenance csts, I would personally stick to brands from East.

[vvvinod]

TAX on Car in India is insane, goes upto 52% in some cases. That makes most cars expensive.

[Arjun Reddy]

Originally Posted by vvvinod

TAX on Car in India is insane, goes upto 52% in some cases. That makes most cars expensive.

The 52% GST is built into the ex showroom price of the car and then you have another 18% on this price as road tax. So basically the GST is again taxed by the state.

[venkyhere]

Originally Posted by Arjun Reddy

The 52% GST is built into the ex showroom price of the car and then you have another 18% on this price as road tax. So basically the GST is again taxed by the state.

the 52% is for the "goods" and the 18% for using road "service" for the "lifetime" of the vehicle; plus tax on fuel, plus toll charges on top of road tax - all paid from already taxed money. In terms of the common man getting his money squeezed out of him, india has a structure similar to developed countries, however, in terms of offering infrastructure back to him (road surface, pothole filling, public toilets, unscheduled road digging without arranging alternate routes, covering up roadworks with dug up mud and deciding its ok to not re-tar it etc etc) india is as disorganized and unruly as underdeveloped countries.

There is a lot of unfairness towards the common man road user, wanting to ride/drive his own vehicle.

[aniyo]

Hi All, not sure if this is right forum or the international automotive scene. Mods can take a call.

Recently me and my friends were talking about cars and how expensive it has become. Good cars like Jeep is always just out of reach and we are forced to settle for small not so great built cars.

We came to the conclusion that,
1. Taxes are the primary reason
2. Second being access to credit. US and Europe have very low interest rate.
3. Third being car lease options which are aplenty in US and Europe.

I am convinced on point 2 and 3 though not sure on point 1.

Do we actually know how much taxes are levied on cars in USA, Europe and Australia?
Are taxes in India simply so high that cars tend to be costlier. In India land and labor will be surely cheaper than in developed countries with lesser compliance cost. This should offset the tax cost if at all there is huge difference.

Or is it that Global manufacturers just don't see the demand in India and don't bother.

[HKap]

GST here in Canada is 13%. So, no matter what car you buy, you will pay 13% GST. That's it.

The interest rates vary a lot depending on the deals available. I ended up with a 0% lease on my Acura ILX. Believe it or not, I pay less than what I would pay for a similarly equipped Honda Civic (The Acura's distant cousin).

In general the interest rates are below 5%. There have also been interesting subscription deals popping up south of the border in the USA. I know that Porsche, Mercedes, BMW, Volvo and Audi have attractive subscription services where you pay a per month cost and can drive any car from the allowed pool for as long as you want. BMW charges you a minimum of USD 1099 per month and lets you select cars like the 330i, 240i, i3, X3. You pay USD 300 more to move up to the M2, 5 series or the X5 and about USD 2700 for the M division cars.

https://www.accessbybmw.com/pricing

https://www.porschepassport.com/membership


I find this really interesting. If you have this "khujli" of driving the 911 but aren't ready to make that big commitment then its always better to subscribe to this service for a couple of months a year (summer), enjoy the drive and never have to worry about paying the EMI, maintenance and of course the ridiculous insurance costs.

[aniyo]

I was checking tax in UK and I understand only CO2 tax is levied on cars and nothing else. This is mostly an yearly fee. Makes life so much more simple to move from one place to another.

Even in USA the maximum tax on cars is 10-12%. If you move your cars across states they have some sort of rebate on the earlier paid taxes.

I wonder why we charge a whopping 45-48% on cars that are essential not premium or Luxury cars like City and Verna.

I am sure the tax in India can be brought down without losing the revenue to center or states. Political will is a rare occurrence in India

[GTO]

Originally Posted by aniyo

We came to the conclusion that,
1. Taxes are the primary reason
2. Second being access to credit. US and Europe have very low interest rate.
3. Third being car lease options which are aplenty in US and Europe.

Also consider:

1. The size of the market. Volumes = cheaper prices. A Toyota Camry sells 3 - 4 lakh copies a year in the USA (it's more like a 1,000 / year in India).

2. In USA, almost 50% of the population pays their income tax. In India, <5% do. Thus, it is but natural that the government will heavily tax luxury items like cars.

[lurker]

GTO, paying for fuel in India is like paying income tax. The govt makes so much money off fuel that they must subsidize luxury cars and encourage more car sales. Infact cars are one aspect which has a tax compoment on every activity. whether it be road use (road tax), highway use (toll tax), vehicle use (pollution tax), shopping use/mall hopping (parking tax), indeminity (yearly insurance tax), sundries (vehicle fines/challans/speed tickets), state revenue (LTT, VAT), Central revenue (GST, excise), fuel revenue (fuel tax), employment generation (maintenance), industrial growth (ancillary OEM network).

Infact this one sector gives so much in return to govt that they are as of today lying if they claim that they are attempting to restrain "luxury vehicle" sales.

[PYSO]

Originally Posted by aniyo

I wonder why we charge a whopping 45-48% on cars that are essential not premium or Luxury cars like City and Verna.

Don't forget the 10% or more we pay as road tax, registration costs etc on top of GST. No two ways about it - these are extortionate rates.

Originally Posted by GTO

2. In USA, almost 50% of the population pays their income tax. In India, <5% do. Thus, it is but natural that the government will heavily tax luxury items like cars.

The sad part is that the honest taxpayers - the 5% who pay income taxes - are punished again, with the extortionate gst rates on buying a car.

Fundamentally flawed structure of Indian taxation - where the bad guys are rewarded and the good guys (honest income tax payers) are punished.


There is a simple solution to fix this flaw. Simply reduce GST to a lower rate like 15%. Then collect additional 30% as TCS.

This will ensure that the honest income tax payer only pays the same amount of tax as the ones who don't pay income tax (because the money collected as TCS will get adjusted against the total income tax outgo of the honest income tax payer).

The govt also continues to earn 45% tax on each car purchase done by 95% of the population. The govt will earn lesser (between 15% and 45%) from the 5% of population who are honest taxpayers.

[Chethan B G]

Originally Posted by GTO

Also consider:

1. The size of the market. Volumes = cheaper prices. A Toyota Camry sells 3 - 4 lakh copies a year in the USA (it's more like a 1,000 / year in India).

2. In USA, almost 50% of the population pays their income tax. In India, <5% do. Thus, it is but natural that the government will heavily tax luxury items like cars.

Absolutely right. It is more like the Government trying to meet it's numbers.

But the sad part is; today the system is penalizing people who are compliant. Maybe, this is one of the ways to serve the Country.

TCS should improve compliance.

Originally Posted by PYSO

There is a simple solution to fix this flaw. Simply reduce GST to a lower rate like 15%. Then collect additional 30% as TCS.

TCS can be claimed back even though that can lead to additional scrutiny.



Looking at the import tax, manufacturers in India are getting a higher value (margin) for their products I suppose. If we compare a B2 segment sedan with the D1 segment; a car like a Toyota Yaris should bring in more profit than a VW Jetta for the respective companies.

[lurker]

Two tankful of petrol in India per month which translates to driving of around 2k/month itself earns govt an income of ₹ 3200 / month.

Taking average tank size for most mid segment hatchbacks, sedans as 40 litres

Considering petrol price at ₹80 and tax component for every litre at ₹42.

40 X 2 = 80 litres X 42 tax/l = ₹ 3360 tax to govt/month.

This is on top of other taxes, mind. Great way to mop up tax from those who are doing economic activity (hopefully) yet escape tax net.

Very bad deal for those who pay income tax and wealth tax and are then treated the same as a common tax evader at the pump.

Automobiles constitute single biggest revenue stream for any govt.

[RedHerring]

Originally Posted by PYSO

There is a simple solution to fix this flaw. Simply reduce GST to a lower rate like 15%. Then collect additional 30% as TCS.

That's actually a great idea and will be fair to people like us who are the compliant tax payers. The only problem with this is that we are a minority and basically completely useless as far as votebanks go. So no political party will even think on these lines as there is no perceivable benefit for them.