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Old 10th August 2019, 10:49   #16
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Default Re: Auto industry wants govt. to slash GST rate to 18%

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Originally Posted by oxyzen View Post
To everyone complaining to reduce prices instead of reducing taxes, here is a chart showing how much money the Govt Makes vs how much money the car manufacturers make for the sale of a car.

Too many wrongs in the post. First, Who pays 7L in income tax for 20.5L earning? There are so many exemption that the actual income tax comes to 3L at most. Second, 5% margin for company? Really? You mean to tell me Hyundai has only 5% margin on Creta? In any case, the basic point is that it is not upto the government to ensure the profitability of the car companies. If the car companies want to increase the sale, they can go ahead and reduce the price on their own. Their greed has been phenomenal.
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Old 10th August 2019, 11:13   #17
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Default Re: Auto industry wants govt. to slash GST rate to 18%

If one looks at what someone is providing for the money being paid to them, its the government that fails miserably. They fail at levels including providing social security for all slabs.

Why cant for once they try to reduce the tax burden (including corporate tax) and see if it makes any difference. It requires a rethink at all levels which they can start in parallel if they have the will to do so. If they want to tax the hell out of everything we buy, they should atleast reduce or remove income tax.
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Old 10th August 2019, 11:20   #18
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Originally Posted by ashlil View Post
Too many wrongs in the post. First, Who pays 7L in income tax for 20.5L earning? There are so many exemption that the actual income tax comes to 3L at most. Second, 5% margin for company? Really? You mean to tell me Hyundai has only 5% margin on Creta? In any case, the basic point is that it is not upto the government to ensure the profitability of the car companies. If the car companies want to increase the sale, they can go ahead and reduce the price on their own. Their greed has been phenomenal.
What about 48 percent GST? What about the near 20 percent road taxes?
Sure , it’s not the govts job to ensure profitability of private businesses, but that doesn’t mean taxing the crap out of them.

And as for the “greed”of car companies. I mean doesn’t every business exist to make money? Car companies weren’t selling cars prior to 2010 for charity. They were just as greedy then too.
And again as I have said before in an earlier post in another thread. This entire car companies ganging up like super villains to hurt the consumer theory is far fetched at best. I mean really which do you think makes more sense? The entire car industry from Maruti to Mercedes Benz colluding and conspiring to jack up prices to rip off the Indian consumer or that the economy has fundamental issues like inflation, weakening currency, a public finance sector that’s neck deep in bad assets, high taxes and regulations and so on.

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Originally Posted by srishiva View Post
If one looks at what someone is providing for the money being paid to them, its the government that fails miserably. They fail at levels including providing social security for all slabs.

Why cant for once they try to reduce the tax burden (including corporate tax) and see if it makes any difference. It requires a rethink at all levels which they can start in parallel if they have the will to do so. If they want to tax the hell out of everything we buy, they should atleast reduce or remove income tax.
Oh but they can’t cut taxes. Neither indirect taxes or Income taxes. For them to do that first they would have to slash govt expenditure significantly. That means letting go of and privatising vast portions of the bloated public sector. You know they can’t do that. How will they ever loot funds and engage in corruption if they cede control like that. Until a very serious threat to the economy is imminent like what happened in early 90s, there is no hope of either sides doing the right thing. Till then it’s jugaad all the way everyday

Last edited by ajmat : 10th August 2019 at 12:42.
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Old 10th August 2019, 11:46   #19
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Default Re: Auto industry wants govt. to slash GST rate to 18%

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Originally Posted by ashlil View Post
You mean to tell me Hyundai has only 5% margin on Creta? In any case, the basic point is that it is not upto the government to ensure the profitability of the car companies. If the car companies want to increase the sale, they can go ahead and reduce the price on their own. Their greed has been phenomenal.
I'm being different here. We know business is not run for charity. Manufacturers have many obligations to meet and it needs to run a sustainable business (exception being the new age companies - Flipkart, Amazon etc who get massive direct investments). Maruti Suzuki for example runs with an operating profit margin of around 11-12%. You take into account the taxes etc, it will further reduce to single digits (Net Margin). To maintain the net margin, most of the manufacturers price their volume segment cars with very less margin and the higher segment cars with more margin. So it doesn't make any sense to say "Creta has only 5% margin?". On the other side, bringing down GST for sure will be a win win situation for both Govt and manufacturers (volumes compensate the gap and needless to talk about employment increase etc). Now, as a matured automotive forum we all understand these things de facto. Just because the govt is not capable of building good infrastructure, we can't put words into someone's mouth.
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Old 10th August 2019, 11:52   #20
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Default Re: Auto industry wants govt. to slash GST rate to 18%

Posted this earlier too and it's just an anecdote, I was looking to upgrade my car 3 years ago, with a budget of 13-15 lakhs, 3 years later, I am back in the market for upgrades but exactly with the same budget but the same cars which were falling in my bracket earlier have now moved beyond my budget
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Old 10th August 2019, 12:27   #21
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Default Re: Auto industry wants govt. to slash GST rate to 18%

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Originally Posted by ashlil View Post
Too many wrongs in the post. First, Who pays 7L in income tax for 20.5L earning? There are so many exemption that the actual income tax comes to 3L at most.
Well, those of us who have not invested in the real estate bubble, and still have other non deductable debts still have to pay through our nose in taxes.
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Old 10th August 2019, 12:39   #22
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Default Re: Auto industry wants govt. to slash GST rate to 18%

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Well, those of us who have not invested in the real estate bubble, and still have other non deductable debts still have to pay through our nose in taxes.
In that case you show the max limit HRA, then there is mandatory PF. Point being no salaried person has straight 30% deduction of there salary. Not that it doesn't hurt for whatever % does get deducted in the end.
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Old 10th August 2019, 12:54   #23
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Default Re: Auto industry wants govt. to slash GST rate to 18%

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Originally Posted by nakul0888 View Post
Oh that’s great. So let me get this straight. The govt “supposedly” taxes the crap out of a car buyer for “allegedly” building roads, infrastructure and what not for the greater society. The same govt fails miserably at its duty.
And to add to that highway cess on fuel and exorbitant toll plaza along the highways. If the income from vehicle tax is used only for roads and related things, we could have a great infrastructure. That's my take.
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Old 10th August 2019, 13:36   #24
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Default Re: Auto industry wants govt. to slash GST rate to 18%

Over a period of 5 years would it cost less to pay Road-Tax annually vs. paying a one time fee?

Road-Tax rates are jacked up to ridiculous levels over the past ten years that they form a very significant part of the initial payment amount.

Why not give the option to pay them annually so the initial burden is reduced for people and they also have the flexibility when they move to other states?
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Old 10th August 2019, 13:46   #25
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Default Re: Auto industry wants govt. to slash GST rate to 18%

It's basic economics. Expenses vs Income.
Expense: Freebies for election, Corruption through tendering for large projects, government employee salaries, benefits to politicians, Oil and gold imports. etc.

Income: Tax from Corporate, individual, GST and tax revenue on oil and alcohol.

I really don't see room for government to reduce taxes on non-essential products like automobile. They too need the money.

We as a nation import gold which is the second biggest item on import after oil. Do we really need gold so much. We have all the wrong obsessions.
The auto companies have got land for cheap, they get massive tax breaks in SEZ, electricity and water is subsidized yet they want more reduction in taxes.

I feel the issue is much more to do with structure than just taxes, the best way to reduce prices is to have fantastic local production and containing the rupee. This will help in better margins across the board.
Or reduce import duties on specific components to reduce cost of the car. But a blanket reduction on taxes is not a right approach
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Old 10th August 2019, 14:13   #26
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Default Re: Auto industry wants govt. to slash GST rate to 18%

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Originally Posted by nakul0888 View Post
Oh that’s great. So let me get this straight. The govt “supposedly” taxes the crap out of a car buyer for “allegedly” building roads, infrastructure and what not for the greater society. The same govt fails miserably at its duty. And you are putting the blame on the car makers and people who buys cars for the shoddy job the govt does? How does this even make any sense? Why don’t you actually go after the party that is actually failing at its basic function?
The understanding that road taxes are designated to be spent on road is incorrect, with respect to established government practices. Everything goes into a consolidated fund, after which the government decides on how to spend the funds.

Money collected by way of road taxes by the states (or GST collected and distributed between the Centre and the States) may be spent on anything from renovating police stations, building airports, providing disaster relief...the list is endless.

Another way to understand this: taxation is based on what the government feels it can get away with without unmanageable negative impact. Spending decisions are independent of taxation decisions.

Last edited by vipul_singh : 10th August 2019 at 14:17.
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Old 10th August 2019, 14:19   #27
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Default Re: Auto industry wants govt. to slash GST rate to 18%

It looks like a pressure tactics by our Automobile companies by deliberately allowing a free fall of sales leading to Job loss and Economic crisis so that their wish of reducing the Tax rates succeed. Instead of pleading for Tax reduction, it is time for the companies to introspect their pricing strategy and cost economics. This is the best time to tighten ones belt and aim for further reduction in manufacturing and procurement costs. SIAM should take steps in this direction and not engage in cartelisation which ultimately robs the Buyer and the government.
The concept of VFM is becoming a distant dream for car buyers these days!!!
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Old 10th August 2019, 14:36   #28
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Default Re: Auto industry wants govt. to slash GST rate to 18%

Well truth be told, the govt will in no way pay heed to this because post GST their estimates and actuals of tax revenue have been shockingly bad.

I would be pleasantly surprised if this goes through.

However, it has to be mentioned that for the amount of tax that we pay and what we get in return in terms of infrastructure, it actually looks more like they do 'vasooli' than take tax.
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Old 10th August 2019, 14:38   #29
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Default Re: Auto industry wants govt. to slash GST rate to 18%

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Originally Posted by Sarath_MoJa View Post
The concept of VFM is becoming a distant dream for car buyers these days!!!
Well, the Skoda Rapid Rider seems like a VFM product. If the Rapid can go back to prices which are 3 year old, why not the other manufacturers?
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Old 10th August 2019, 15:02   #30
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Default Re: Auto industry wants govt. to slash GST rate to 18%

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Originally Posted by ashlil View Post
Who pays 7L in income tax for 20.5L earning?
If you are earning 20.5L pre tax, you probably wont buy a car worth 14L. I know some people do by taking loans and what not, but I believe the cost of the car should be less than the annual savings. So if you earn 35L, you can expect the 20.5L that you shell out for for buying the car has been taxed @ 30%.

The moral of the story is Govt makes 10X more than what car manufactures make on a car sale. Time to relax taxes.


“I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.” ― Winston S. Churchill
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