[condor]

Originally Posted by AirbusCapt

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.

Would depend on the rules. What you say may be the general concept, but that does not mean rules for MV sales cannot be different.

Can some one who understands taxation - esp for sale of goods check the rules for MV sales ? (or even just product sales) ? Would be good to read the specific section of the rules

[venkyhere]

I have a fundamental grouse with this whole "lifetime tax" system.
Why should it be based on the invoice price of any vehicle at all ?
Dimensions, weight -- decide tax based on this alone. This is what decides the 'utilization' of infrastructure.

( Similar case with registration fee and property tax. Registration fee / property Tax amount ought to be decided based on how much area of land (or undivided share of land) is occuppied, why should there be a separate 'building tax' just for putting together bricks and cement ? Anyway all the construction material is taxed beforehand before the customer utilizes them )

Enough rant for the day. The whole movable/immovable property taxation system in our country is aimed purely to squeeze the common man. Politico bigshots and real estate mafia never pay taxes on anything they own, anyway.

[sdp1975]

Here's what I see in Karnataka MV taxation act :

Cost of Vehicle in relation to, -
(a) a Vehicle manufactured in India means cost of the vehicle as per the
purchase invoice issued either by the manufacturer or dealer of the vehicle and
shall include the manufacturing cost, excise duty, sales tax and surcharge or cess
as payable in the State of Karnataka;

So there should be nothing lawfully wrong in a reasonable discounting and taxation on the invoice price.

[deehunk]

Yes, but there is no cap on discounts given by the dealer. The crackdown started after RTO authorities found out a large scale under pricing of cars in INR 20+ lakhs segment.

[wildsdi5530]

Originally Posted by AirbusCapt

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?

Actually according to the income tax act, if the income tax officer feels that there is some discrepancy, he has the authority to levy tax based on your qualification and experience and past returns. Basically an arbitrary number and it's unto you to claim a refund after proving him wrong. And they do send out these notices often.

[shady8701]

Originally Posted by wildsdi5530

Actually according to the income tax act, if the income tax officer feels that there is some discrepancy, he has the authority to levy tax based on your qualification and experience and past returns. Basically an arbitrary number and it's unto you to claim a refund after proving him wrong. And they do send out these notices often.

Which may be the case, but the fact is, your employer will still calculate TDS based on the number of days you were paid for (basically the salary that you were paid). So unless the IT Officer demands a proof (which your salary slip should provide), that's the correct tax to pay.

[lamborghini]

I think for higher value transactions the Govt. takes either the rate mandated by them or the actual selling price - whichever is higher.

For example, in real estate stamp duty is applicable on the ready reckoner rate, or the agreement value whichever is higher.
I don't see why it would be any different for cars - charging on ex-showroom price quoted by the manufacturer.

Yes, it does pinch, but sadly thanks to the large influx of black money and other such activities, the Govt. is often forced to come out with such rules due to a few unruly elements of society.

[vshankarhere]

Absolutely ridiculous action from the KA Transport department. First of all, ex-showroom price is inclusive of GST and cess when the car is billed to the dealer by the manufacturer. When we pay road tax, we are basically paying tax for the tax we have already paid. And they now squeeze further more. Under invoicing and discounting are two different things. If a dealer wantedly shows a reduced ex-showroom price but pockets the difference from a customer its a wrong practice. Any properly audited dealership will not indulge in this. When the vehicle itself is sold at a discounted price, RTO expecting tax for the full amount is not right.

[wildsdi5530]

Real estate and cars cannot be compared. There are plenty of short cuts which can be possible in real estate and many variables as well. A car has each part invoiced and accounted for, the paper trail is 100%. Any audit will reveal this. So a discount offered should not be taxed. Even if hypothetically under invoicing occurs, how is the remainder amount going to be shown on the books? As a loss to be pocketed by the dealer? How would the company allow that, the dealership would be cancelled. The dealer can accept upto Rs. 2 lakhs in cash, but he does deposit it in the bank with the purchaser's PAN. So no room for real black money.
The Karnataka Govt is just being a dog in a manger and looking for perceived loss of revenue and wants it's money coming to it. I guess someone read about the old story of Sachin's Ferrari.
BTW the judgement was supposed to be out last Wednesday, what happened??

[wildsdi5530]

So I've heard that the judgement is out and thus we have to pay Road tax on the Factory Ex-showroom rate irrespective of the discounts offered.
So does this mean that I can claim depreciation at the same rate? For Example, If the new car is 35 lakhs and I get discounts of 5 lakhs, but have to pay a tax on 35 lakhs, When I claim depreciation in Income tax, Do I have to claim 15% on 35 lakhs or on 30 Lakhs?
Also assume I have a return to invoice insurance, If I have a total loss after about 3 years of usage, will I get an amount of 35 Lakhs or 30 lakhs?
It sounds like a good offer from the Govt. Buy a car for 30 lakhs, use for 3 years, crash it and get back 35 lakhs.
Finance guys and Lawyers please advice if this is possible?

[Nithesh_M]

Originally Posted by wildsdi5530

So I've heard that the judgement is out and thus we have to pay Road tax on the Factory Ex-showroom rate irrespective of the discounts offered.

I know the thread is a bit old and I apologise for bumping it back up. But does anyone have a copy or a news article of this judgement?
Currently negotiating with 2 different dealers and need to know if I'll be forced to pay road tax on ex showroom or discounted invoice.

[itwasntme]

Originally Posted by Nithesh_M

I know the thread is a bit old and I apologise for bumping it back up. But does anyone have a copy or a news article of this judgement?
Currently negotiating with 2 different dealers and need to know if I'll be forced to pay road tax on ex showroom or discounted invoice.

As far as I am aware, KA RTOs uniformly insist on ex-showroom rates as per the official price lists filed with them. No negotiation allowed based on the discounted price etc. But do post your experiences when you actually reach that point.