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Old 15th May 2019, 11:46   #16
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Default Re: KA cracks down on luxury cars for under-invoicing

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Originally Posted by serious_maniac View Post
Thus the showroom pocketed savings from road tax or other way to look is that they gave me fair discount considering road tax and TCS savings.
I personally feel this is not correct, and regardless of what deal/discount they offered to you, the road tax collected by them (as captured in the dealer's itemized receipt) SHOULD match the RTO receipt for taxes remitted to them.

That has been my experience in the last 12 years in BLR while buying 6 news cars from 5 different manufacturers.
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Old 15th May 2019, 11:53   #17
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Default Re: KA cracks down on luxury cars for under-invoicing

Instead of all this nonsense, they should just make road tax as a fixed amount for a particular car.
For example, the road tax on Creta will be Rs xxxxx (Which could be a certain percentage of the average prices of various variants.) irrespective of the variant you buy and the discounts you get. After all, all Creta take up the same amount of space on the road and cause the same amount of pollution. Having more add-on features shouldn't mean more road taxes.
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Old 15th May 2019, 14:54   #18
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Default Re: KA cracks down on luxury cars for under-invoicing

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Originally Posted by car-dent View Post
Instead of all this nonsense, they should just make road tax as a fixed amount for a particular car.
Most taxes as well as tariffs of certain essential goods are applied on the "Capacity to pay" principle. The wealthier you are, the more you pay. Income tax and Electricity bills have a classic "Telescopic" tariff/rate. Just look at your electricity bill for example. If you consume less (electricity) the rate per unit is Rs X per kwh; whereas if you consume more then the rate is Rs X+ per kwh. In common parlance these are called slabs, with a higher rate for those who can afford more.
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Old 15th May 2019, 15:15   #19
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Default Re: KA cracks down on luxury cars for under-invoicing

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Most taxes as well as tariffs of certain essential goods are applied on the "Capacity to pay" principle. The wealthier you are, the more you pay. .....
Seems unfair? Join the gang.
I agree. I don't even mind that concept. They can fix a Certain fixed amount to every car model, The costlier the average price of the car, the higher the tax. But I believe there should be the same taxes on various variants. For ex. if a car has variants from 10 lacs to 16 lacs, the taxes can be an x-percent of 13lacs (Average price) on all variants.

If you buy a lower variant and put aftermarket accessories. then no road tax has to be paid, so why road tax on accessories fitted from the factory.

Last edited by car-dent : 15th May 2019 at 15:16. Reason: typo
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Old 15th May 2019, 15:41   #20
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Default Re: KA cracks down on luxury cars for under-invoicing

They are not preventing the discounts from being given, but rather the taxes to be properly calculated to prevent situations like what @aniyo has detailed.

If the car price is 40L and dealer wants to give a discount of 10L, the car will still be taxed at 40L, but the final price to customer reduced by 10L regardless. (Customer will not get the reduction in tax for the discount he got though)

Govt is trying to avoid loss in revenue for a sale pact made between dealer and the consumer as @wildsdi5530 mentioned in the case

Purchase price: 40L
Tax (Assuming 20%): 8L
Discount: -10L
Total price to be paid: 38L (40 + 8 - 10)

Before this it would have read like;
Purchase price: 40L
Discount: -10L
Tax (Assuming 20%): 6L (On the discounted price of 30 L)
Total price to be paid: 36L (40-10+6)
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Old 15th May 2019, 15:53   #21
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Default Re: KA cracks down on luxury cars for under-invoicing

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Originally Posted by car-dent View Post
If you buy a lower variant and put aftermarket accessories. then no road tax has to be paid, so why road tax on accessories fitted from the factory.
I disagree. Technically, you are paying tax on accessories in the form of GST(the amount may be less). It is just not accounted under RTO income. Also, if I don't want anything extra (for ex.: using it for taxi), why should I pay extra?

But your concept holds merit. If vehicles are evaluated on the basis of space, they must also be evaluated on weight, fuel economy, pollution levels(tax on environmental impact) etc. While this would be the right way to do things, it quickly becomes too complicated. So, the current tax system of more tax on higher prices makes sense.
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Old 15th May 2019, 17:26   #22
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Default Re: KA cracks down on luxury cars for under-invoicing

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Originally Posted by earthian View Post
In common parlance these are called slabs, with a higher rate for those who can afford more.
I think Mumbai has fixed the maximum at 20 Lac. Perhaps, Karnataka should also have something similar, Our thread- Super Cars - Banglore runs into maximum pages


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Originally Posted by sarathlal View Post
They are not preventing the discounts from being given, but rather the taxes to be properly calculated to prevent situations like what @aniyo has detailed.
There are Two different components as far as Taxes goes, GST and Road Tax. GST is about 48-53 % and Road Tax in KA has different slabs based on Value. GST authorities have no concerns on the discounts as its a norm. Almost all products are sold at Discounts from Manufacturer to Wholesaler/ Retailer and then to Customer. GST is charged on the Basic Price and for the customer sum total of GST + Basic Value should never be higher than MRP.

Problem is KA RTO which is unfairly demanding Dealers to bill the cars at Full prices so that they can get road Tax calculated at MRP. This is probably after the court ruling, earlier they never bothered with the invoice value and would just follow the MRP.

Now, Dealers cannot Invoice to customers at Full value as they will end up paying more as GST and the overall discounts will be less as you have explained, so customers will not only end up paying higher prices to Dealer but also higher RTO.

In my opinion, RTO has no jurisdiction to force any Dealer to Bill at MRP as there is no such law. Dealers are always free to invoice at prices less than MRP. If the court has overruled MRP based Road Tax, they should accept the verdict.

Last edited by Turbanator : 15th May 2019 at 17:40.
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Old 15th May 2019, 18:55   #23
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Default Re: KA cracks down on luxury cars for under-invoicing

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Originally Posted by condor View Post
When we buy regular cars, we are asked to pay tax at ex-showroom price. Any discounts are on the total price. So why are the luxury cars getting special treatment ?
Actually no. If you approach the RTO independently, You have to pay the tax as calculated on your specific invoice. So if you manage to get a car at a discounted ex-showroom price, you have to pay tax only for the amount you paid. In fact though essential accessories, other accessories and insurance are also added to the final bill, your road tax is on the actual invoice value of the car only. For example, reregistration of your out of station car will be based on the invoice value that you paid, irrespective of what the car used to cost in the current state at the time of purchase or current cost.
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Old 15th May 2019, 19:17   #24
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Default Re: KA cracks down on luxury cars for under-invoicing

@serious maniac & @wildsdi - this may be now, but my purchase was 6 years back. May be I overlooked, but I had to pay full Road Tax. Logic was that the Road Tax is fixed on ex-showroom price, and since this is fixed, the tax for a particular model to be received by the Govt is also fixed. This also looks to be the logic being used now for the crackdown. The Govt seems to want the amounts assessed for the specific models.
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Old 15th May 2019, 22:50   #25
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Default Re: KA cracks down on luxury cars for under-invoicing

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Originally Posted by condor View Post
@serious maniac & @wildsdi - this may be now, but my purchase was 6 years back. May be I overlooked, but I had to pay full Road Tax. Logic was that the Road Tax is fixed on ex-showroom price, and since this is fixed, the tax for a particular model to be received by the Govt is also fixed. This also looks to be the logic being used now for the crackdown. The Govt seems to want the amounts assessed for the specific models.
This logic is not only convenient, but maximizes taxes. As explained by others in this thread, this is not entirely logical and therefore unlikely to hold up to legal scrutiny.

As an aside, did you get a road tax receipt from the RTO with the amount that you'd paid? If you only have a receipt from your dealer, the dealer might have simply paid tax based on the amount shown in your invoice and pocketed the difference.

For what it is worth, as a counter case, I've always paid road tax based on the invoice amount (i.e. after factoring in discounts) in Bangalore
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Old 15th May 2019, 23:16   #26
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Default Re: KA cracks down on luxury cars for under-invoicing

I have been reading the thread, and would like to offer my opinion on this, based on both personal and legal experience.

Personal experience: Bought my RedNBlack Truck last year. Got a cash discount of 30K. However, paid the entire road tax. Was asked the question at the time of registration, if any discount was given - though clearly shown in invoice - and when confirmed, they manually calculated the tax and confirmed payment of full amount.

Another situation to the contrary wherein my friend had purchased a Grand i10, and dealer gave around 60K discount. When he went for registration, he was turned away, as he was found to have paid 9K less road tax. He was asked to bring a DD for the correct amount, and submit it at the time of registration.

Legal Aspect: Discount(s) are the prerogative of a seller. In order to maximize sales, you can give any discount you want. However, you are obligated by the law of the land to pay the actual taxes applicable, on the actual value of goods and/or services provided. Whereby, the calculation of taxes is always at the ex-showroom price.

This is applicable in case of discount sales - Buy X Get X free types - wherein, as per the latest Central Government directives, you can give the product for free, but you have to charge applicable CGST/SGST on the goods and/or services provided. Big Bazaar/Brand Factory/other Factory outlets with such offers clearly mention this in their bills.
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Old 16th May 2019, 07:47   #27
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Default Re: KA cracks down on luxury cars for under-invoicing

When I bought my previous cars with heavy discounts, the invoice did not show the discounted price. I paid full road tax and got receipts from RTO for the same amount. I remember the dealers telling me clearly that discounted price cannot be billed as invoice value. The dealers were Vinayak Skoda and Trident Renault. This is a valid statement, else tomorrow someone may buy a Jaguar or a Rolls Royce at a discounted price less than 10 lakhs and get away with the TCS too. A sensible approach by RTO would be to stop cash payment and make DD mandatory for paying Road Tax. The "payee" should be RTO, Commisioner and "payer" should be the buyer. I guess, this can make both the RTO and the owner equally responsible for evading any road tax.

Last edited by deehunk : 16th May 2019 at 08:10.
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Old 16th May 2019, 09:04   #28
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Default Re: KA cracks down on luxury cars for under-invoicing

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I, on another note turn out to say, "What is happening with the taxes paid like this?" topping already good roads to make it worse!
Give a dime about other roads which needs mending.

when do we start checking the "Value for money" in taxes we pay?
And for revenue losses? to whom?
That's a different battle, fight it separately. Don't mix up the two battles.

It's not right to argue that just bcoz our taxes are not being put to good use by some subset of govt depts, why should we pay taxes to the state, that too one that is levied *correctly* calculated as @aniyo said.

By that token, we'd be arguing about paying Income Taxes too!

There are works happening across the country like highways being modernized, railway tracks being doubled, etc. Taxes are needed for these. True, it is still not put to as much use as we'd like, but things are improving.
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Old 16th May 2019, 19:13   #29
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Default Re: KA cracks down on luxury cars for under-invoicing

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Originally Posted by LegalEagle View Post
you have to charge applicable CGST/SGST on the goods and/or services provided.
Very true for GST and erstwhile VAT, but road tax is based on the invoiced value. It always has been. GST is applied to the production of the product, hence even if given off for free, tax has to be paid. Road tax is based on the purchase price of the car, Ex showroom price varies according to the season. Just because the car was cheaper in Jan than in April, you cannot buy an April model and pay tax according to Jan ex-showroom prices.
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Old 17th May 2019, 07:11   #30
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Default Re: KA cracks down on luxury cars for under-invoicing

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Originally Posted by sarathlal View Post
They are not preventing the discounts from being given, but rather the taxes to be properly calculated to prevent situations like what @aniyo has detailed.

If the car price is 40L and dealer wants to give a discount of 10L, the car will still be taxed at 40L, but the final price to customer reduced by 10L regardless. (Customer will not get the reduction in tax for the discount he got though)

Govt is trying to avoid loss in revenue for a sale pact made between dealer and the consumer
Highly illegal. Will be challenged and shot down in court. How can you fix a tax on an amount which has not been transacted on? If the car costs X RS, the dealer gives a discount if Y RS, the net cost is X-Y. Tax should be applied on the same and not on X.
Let's take a different example. You get a certain salary for your work for 31 days. Assuming you don't turn up for work for say 10 days and your employer cuts your salary @10 days of work. Will your income tax be for 31 days of work or 21 days of work?
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