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Old 13th August 2019, 12:36   #61
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Default Re: Auto industry wants govt. to slash GST rate to 18%

There needs to be change in the way tax is calculated which would benefit the public for LMVs. It need not be 28% flat. The money we spent on road tax is never justified as we still need to pay toll to use good roads. At least govt can help public with their safety.

1. Better Crash Rating = Lesser the tax. A 5-star rated car would have the basic tax slab, less each star would add up the tax slab by 3 to 5%.

2. Older the platform = higher the tax. For the first 6 years of the product, the platform tax remains constant, and then it increased by 5% on subsequent years. Yes, 15 year old XU500 should be taxed more than an new Hector or Harrier

Last edited by Superleggera : 13th August 2019 at 12:42.
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Old 13th August 2019, 14:43   #62
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Default Re: Auto industry wants govt. to slash GST rate to 18%

Instead of cutting down on taxes, the manufacturers should lower down the prices. Every three months we hear about the increase. In past, whenever i have inquired about a new car, the salesman always told me- "Sir, next month the prices are going to be increased. Book in this month and take delivery whenever u want". And most of the time it has turned out to be true.

But i just wonder that what will these manufacturers do now. Will they will resort to further cost cutting? Market leaders like will start the trend of putting benches instead of seats and a handlebar instead of steering, bathroom mirrors instead of normal automotive mirrors, glass window instead of Windscreen and many such stuff. And then all the companies will start following them. Jokes apart, but these companies have been ripping apart the buyers for long now. Compared to the car prices, income of the middle class have not gone up so considerably. And even if income has increased, a normal service holder has to bear the brunt of inflation and ever increasing cost of education of his children and increasing his standard of living.

Coming back to auto companies, the push sales and over enthusiastic sales team has been pushing volumes and now when the saturation level has reached, they are running out of ideas. To cover up for all this, now they are asking for GST rate cut. But if the government resorts to rate cut, the state government will immediately raise the prices. So the situation will remain as it is. Also the 10 years rule that the government has proposed has almost killed the second hand market. In tier II/III cities, people keep their cars for as long as 20-25 years. What will they do with their vehicles? If the rule extends to all the cities, then we may see a junkyard in every city simply because government will takes ages to think over having an environment friendly scrapping yard where all the components are properly disposed off. Till then all the confiscated vehicles will keep lying as a pile of heap at some govt allocated yard.

Thirdly, the infrastructure has not gone up considerably as compared to the volume of vehicles sold. In a city like Delhi, very few people want to drive. Nobody wants to hut his knees and take the pain of driving. Ola/Uber have pitched in with intercity bus service as well. For example, between delhi-faridabad-gurgaon-noida, there are many buses run by these cab aggregators and people prefer using them.
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Old 13th August 2019, 15:26   #63
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Default Re: Auto industry wants govt. to slash GST rate to 18%

Last year around this time, the cost of Hyundai Verna SX(O) AT VTVT was 14.57 (on road Chennai). Now it is 15.70. So the increase of 1.13 lakhs is baffling when the same auto manufacturer is complaining of poor sales.
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Old 13th August 2019, 18:06   #64
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Default Re: Auto industry wants govt. to slash GST rate to 18%

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Originally Posted by gopalnt View Post
.. baffling when the same auto manufacturer is complaining of poor sales.
You can take any manufacturer and situation is more or less the same. The Corolla altis diesel base trim was 13.07 lakh (ex-showroom Delhi) in 2014.

https://www.zigwheels.com/reviews-ad...-review/18547/

The same car in 2019 (no groundbreaking tech added) costs 17.71 lakhs (diesel base trim) ex-showroom Delhi

https://www.zigwheels.com/newcars/To...delhi#leadform

Last edited by benbsb29 : 16th August 2019 at 06:53. Reason: Corrected typo for Corolla.
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Old 13th August 2019, 18:39   #65
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Default Re: Auto industry wants govt. to slash GST rate to 18%

Passenger vehicle sales dropped by a whopping 30.98% to 200,790 units in July as weak consumer sentiments hit demand.

As per data available with industry body Society of Indian Automobile Manufacturers (SIAM), commercial vehicle sales in the period under consideration dipped 25.71% to 56,866 units.

Two-wheeler sales last month fell 16.82% to 1,511,692 units.


Source: https://economictimes.indiatimes.com...w/70654361.cms
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Old 13th August 2019, 18:54   #66
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Default Re: Auto industry wants govt. to slash GST rate to 18%

Cutting taxes on automobile is actually negative on economy.
The industry has priced itself out of affordability across the segments.
Every few months they increase prices without improving security or features.
A tail light change adds no value but surely is a way to increase prices.

Having said that, consumers not putting money on quickly depreciating assets are probably investing in appreciating assets or may be provisioning better for other necessity.

I surely would like more funding of public transport infrastructure like metro trains, mono rails etc. (not the bus transport, buses are part of the same problem). A predictable commute time is less painful than one with high variance.
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Old 14th August 2019, 01:05   #67
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Default Re: Auto industry wants govt. to slash GST rate to 18%

I'm surprised by how people are taking the government's side in this discussion. Sure, automobile manufacturers are increasing their prices, but it's the government's taxes that push it into a segment beyond. The GST and Cess tax are incorporated into the showroom price, on top of which road tax is paid. That's double taxation, because politicians from both the Centre and the state want their cut.
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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.
I'm not sure about the accuracy of this statement, but if it's true, why even call it road tax? The government's supposed reasoning is that the funds accrued through "road tax" is for the development of roads, and that is why state governments have been given the power to fix the rate of road tax. So, does this imply that this is just another direct tax that reaches a consolidated fund, on top of the indirect tax that is already being imposed on us? Then, are we being taxed twice for the same product?

My opinion is that we, the consumers, are being fleeced by the government, and that auto-makers are right to demand tax cuts, because the market is no longer willing to pay the prices that the government taxes are forcing automobile companies to fix. Just owning a vehicle provides a plethora of income to the government, from the taxes that are collected from the sale of each vehicle, to the tax that is collected from each litre of fuel(30-40%), to the tax that is collected on each part that is procured for service, to the exorbitant toll fee that is paid at every toll gate. These taxes are beyond unreasonable. India is ranked very low among the "ease of doing business" index, and these taxes certainly factor into that ranking. Unfortunately, our woes will not be alleviated, because the illiterate majority of the population of the country are voting on the basis of welfare of cows and not taxation policies, and the Government has no necessity to look into the concerns of automobile buyers. However, the slowdown in the automobile sector will force the government to deal with the issue, and tax cuts will certainly reduce the price enough to encourage increased consumer spending.
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Old 14th August 2019, 03:16   #68
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Default Re: Auto industry wants govt. to slash GST rate to 18%

The problem India has with reducing taxes for any industry is the small tax base we are working from. The bulk of tax payers in this country are middle class employees who are taxed at source directly by their employers. Once we increase the tax base of this country, the government has the wiggle room necessary to reduce taxes and support industries.

Whether reducing taxes for Internal Combustion Engine cars is wise, is another debate. At some point we need to move away from oil based motors, but whether that is electric or some other type of fuel/power source is debatable. Currently, high taxes are encouraging the potential move to electric cars, but a lack of infrastructure is hindering the process. Charging electric or hybrid cars in cities is difficult enough, let alone on highways or rural areas.

The sad truth of high taxes and diminished demand for cars is the loss of jobs, but that can only be resolved by auto industries adapting to the new reality and producing cars that people will choose to buy. Reducing taxes is a short-term panacea
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Old 14th August 2019, 11:47   #69
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Default Re: Auto industry wants govt. to slash GST rate to 18%

https://www.cartoq.com/buy-the-toyot...now-heres-why/


Why allow rate cuts when greedy manufacturers want to charge 4 lacs in the name of BS6 compliance.

The government should be bring stricter compliance rules which checks on unscrupulous pricing.
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Old 14th August 2019, 12:47   #70
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Default Re: Auto industry wants govt. to slash GST rate to 18%

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Originally Posted by vinaydas View Post
https://www.cartoq.com/buy-the-toyot...now-heres-why/


Why allow rate cuts when greedy manufacturers want to charge 4 lacs in the name of BS6 compliance.

The government should be bring stricter compliance rules which checks on unscrupulous pricing.
Lets see how much the price increase would be. Both Crysta and Fortuner will get a bunch of new hardware if they upgrade the emissions kit in this motor to Euro6 standards - EGT sensors, O2 sensors, urea tank injectors pump, extra diesel injector, DOC+DPF, new mid pipe with urea injectors and the associated paraphernalia. The current engines powering the Crysta and Fortuner were designed as a Euro6 diesel engine for Euro6 Prado (vehicle this engine was launched in) and for non Euro 6 markets they were stripped of all the extra hardware as mentioned above and sold with a simple EGR system and a DOC (diesel oxidation catalyst) with no o2 sensors or egt sensors.

If all that missing kit were to be added the price would definitely go up, we will have to see if all of that makes it to Indian BS6 Crystas and Fortuners. Emission aftertreatment components are not cheap. Regular catalytic converter if one were to buy as a spare would cost 50k or more depending on the manufacturer and the vehicle, a DPF equipped converter would cost a lakh or more easily. Add rest of the hardware to it the cost would go up by another lakh or more.

The story will be the same for other Diesel vehicles from other manufacturers. In price sensitive categories the company may detune the engine (lower combustion temp and more EGR to displace oxygen) to produce less nitrous oxides and save the cost associated with urea injection system. But they will still need to use a DPF as it is used to catch soot and is one of the basic requirements of Diesels meeting Euro 6 norms and if Bs6=Euro6.

Last edited by Sankar : 14th August 2019 at 12:52.
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Old 14th August 2019, 13:05   #71
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Default Re: Auto industry wants govt. to slash GST rate to 18%

Working as a GST professional, I simply do not think that the GST Council will even think of reducing rates to 18%. They met the representatives as a courteous gesture, but I'm afraid they won't do anything. And as such, they've already dodged the demand by stating that this is a temporary phase since consumers have postponed their purchases to post 01-04-2020 because of the fear of low resale value due the new emission norms coming in, if they purchase new vehicles today. They've instead advised the companies to introduce BS 6 compatible vehicles in order to see a boost in demand.

Off topic to the subject matter of this thread, but because of the botched implementation of GST, the fiscal position is tight and hence rate reduction for auto industry looks not possible.
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Old 14th August 2019, 13:23   #72
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Default Re: Auto industry wants govt. to slash GST rate to 18%

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Originally Posted by Sankar View Post
Lets see how much the price increase would be. Both Crysta and Fortuner will get a bunch of new hardware if they upgrade the emissions kit in this motor to Euro6 standards - EGT sensors, O2 sensors, urea tank injectors pump, extra diesel injector, DOC+DPF, new mid pipe with urea injectors and the associated paraphernalia. The current engines powering the Crysta and Fortuner were designed as a Euro6 diesel engine for Euro6 Prado (vehicle this engine was launched in) and for non Euro 6 markets they were stripped of all the extra hardware as mentioned above and sold with a simple EGR system and a DOC (diesel oxidation catalyst) with no o2 sensors or egt sensors.

If all that missing kit were to be added the price would definitely go up, we will have to see if all of that makes it to Indian BS6 Crystas and Fortuners. Emission aftertreatment components are not cheap. Regular catalytic converter if one were to buy as a spare would cost 50k or more depending on the manufacturer and the vehicle, a DPF equipped converter would cost a lakh or more easily. Add rest of the hardware to it the cost would go up by another lakh or more.

The story will be the same for other Diesel vehicles from other manufacturers. In price sensitive categories the company may detune the engine (lower combustion temp and more EGR to displace oxygen) to produce less nitrous oxides and save the cost associated with urea injection system. But they will still need to use a DPF as it is used to catch soot and is one of the basic requirements of Diesels meeting Euro 6 norms and if Bs6=Euro6.
The C Class and the E class were able to release BS6 Ready vehicles while reducing the prices.


It might be via inclusion of Ad blue but nevertheless gets the job done.
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Old 14th August 2019, 17:11   #73
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Default Re: Auto industry wants govt. to slash GST rate to 18%

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Good lord, just look at the proportion of the final buying price going into the govts coffers. I mean even mobsters wouldnt extort their victims like this. Just goes to show the prevailing mentality of those who run the govt towards its productive citizens.


"Fine is a tax for doing something wrong, Tax is a fine for doing something right"

This very statement has a lot of (hidden) meaning when you take into consideration the tax compliance ratio of India.

5.98% is the best direct tax to GDP ratio India has ever achieved...and this is for India which is second largest country in terms of population and maybe when it comes to tax compliance (lowest) is comparable with little known african countries.

The government is just trying to collect as much tax as they can from indirect sources. Then be it through car registrations, insurance, road tax, cess, and what not.

The govt. logic is if you can think you can spend on a car even after knowing the huge cost incurred, then you deserved to be tax :P.

And then all this money used to spend for well being of the "society"

Even a slightest of reduction in GST for cars will be huge dent for gst revenue for government, and in this slowing economy, the government wouldn't want reduction in revenues from GST.

Heck they need more tax collections so that they could spend more on economy through infra projects thus boosting employment and economy in general.

On the contrary even though the rise in petrol/diesel costs, rising car prices, people are just buying the cars. and the government will not budge by reducing these tax till the time the demand is hit significantly.

I hope you guys get the drift of the point which I am trying to drive home.
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Old 14th August 2019, 17:38   #74
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Default Re: Auto industry wants govt. to slash GST rate to 18%

It is hard to digest that new launches like Hector and Seltos have set the sales charts on fire, but the existing manufacturers are struggling hard to sell decent numbers. The existing manufacturers should introspect and deep dive on what is the mood of the consumer, and what they've been doing wrong.

The new age consumer is looking for gadgets, features, safety, design, performance, fuel efficiency, great pricing... all at the same time in the product. Manufacturers need to evolve and innovate and be agile to this fast changing market. I think they've been caught unaware by the new companies/products. As a consumer, even I'm in the market to buy and I am leaning towards the Harrier/Hector/Seltos and not even considering any from the older lot. Bad after sales and service is also to be blamed for the manufacturers plight.

Manufacturers are also to be blamed for the atrocious price rise over the years. For e.g. I had bought my top spec Fiesta for 7.26Lakhs on-road in 2009. When you buy a car, you don't just pay the on-road price, but huge interest on the car loan too which adds up the cost.

I guess the problem is multifolds, high/unrealistic cost of products by manufacturers, high taxation and GST, bad sentiment in the market, job instability, all contributing to the turmoil in their own way. I think manufacturers should take the first step, take a bold step to do a product and price correction. People do have the intent and the cash, make them take the plunge

Last edited by benbsb29 : 16th August 2019 at 06:52. Reason: Corrected typo based on Reported Post.
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Old 14th August 2019, 19:44   #75
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Default Re: Auto industry wants govt. to slash GST rate to 18%

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Lol! It won't make a difference. No one wants to buy these tin boxes even at 20-30,000 Rs less. I rather we put all our energy in the various mass urban transport projects. Middle class people wanna get to work/places in less than hour and for not more than 100-150 rs
I don't quite get you. Why not? How else is Maruti and Hyundai selling so many of their cars if no one wants to buy them? But I do agree with your second point. Yes investment is terribly needed for our failing urban transportation systems and general transportation infrastructure.

Middle class people want to get to work in less than an hour so that they can move up in life and moving up in life includes owning an automobile ( ofcourse I am middle class as well and I am talking from my perspective and owning a nice car definitely is in my agenda for life ).

Last edited by SaiSW : 14th August 2019 at 19:46.
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