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Old 20th June 2024, 06:38   #16
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Re: Toyota once again pushes for rationalization of GST rates | To make them Merit-Based

Another day, another Toyota employee crying hoarse on how unreasonable the government and taxation structure is. CNG vehicles give higher mileage and cut emissions by 20-25% (well to wheel model), still I don't see manufacturers trying to plead the government for lesser or more favourable tax structure. If you don't want the highest tax bracket of SUVs, please make small cars with hybrid tech! Sub 4m cars, mass market.

Quote "Policies and taxation should be aligned towards the national goals (i.e becoming self-energy reliant and reducing carbon emission) and enabling consumers to make a better choice in terms of technology meeting those national goals." Unquote.

Mr Gulati - how will helping Japanese car makers help national goal? You don't have any engineering and innovation centres here, you don't have any listed entities here, you don't have an export based here. With more than 50% MS and ~0% of research in India, Japanese are what is wrong with Indian automobile industry. Also other than sponsored articles and research, there is no metric on how much emissions hybrid cars will reduce over lifetime. Before crying and playing victim, maybe you should put out emission reduction numbers of hybrid vs diesel/petrol published by Toyota in the open and try defending it!
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Old 20th June 2024, 09:01   #17
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Re: Toyota once again pushes for rationalization of GST rates | To make them Merit-Based

Quote:
Originally Posted by theabstractmind View Post
A
I think the tax should be purely based on purchase price or segment. Lower the price, more affordable the car is for someone wanting to enter the car market. The price point itself can be adjusted yearly basis the inflation rate. Worst case scenario is the size. The merit based proposal is another form of lobbying, Toyota is entitled to lobbying. It won't do us buyers any good.
I would advocate two cardinal principles:

1.There should not be any abrupt discontinuity in taxation, e.g. big tax difference above and below 4 m length, big difference above and below 1.2 litre engine size etc. This is to avoid artificial market distortions such as chopping off trunks of cars just to get under 4 m etc.

2. GST rates should fully recognize and acknowledge that people who buy larger and more powerful cars, which take up more of our limited public resources such as road space and precious imported fuel, as well as do more damage to our cities due to environmental pollution should pay disproportionately more.

I would propose a Telescoping GST formula based on length (which is a proxy for how much of our road space the vehicle takes up), and CO2 emissions (good proxy for measuring both fuel efficiency and environmental impact, as less efficient cars pollute more). CO2 emissions should be mandatorily published by the manufacturer for each model and variant, based on a standard fool-proof test that the government should administer. This is a critical piece of info that you will find in every cars' spec sheet in most developed markets).

I would propose that we start with a low base GST rate, say 18%, and zero cess for the small cars with small footprint and efficient powertrains that emits less than a minimal level of CO2. For example, less than 4 meters in length and less than 100 gm/km in CO2 emissions are charged zero cess. Then, as size and emissions increase, the cess increases quite rapidly as the cars get bigger and more polluting, so that the largest cars which are most polluting pay disproportionately higher. I have provided a formula I would propose below that meets dual objectives of being reasonable to understand for the customer, yet the does not deplete the aggregate GST revenue for the government by too much, as the CESS Percentage Factor of 30% below can be tweaked to achieve revenue neutrality.

Cess percentage =

(
(ABS(Length in Meters minus 4) divided by 4))
Plus
(ABS((CO2 emission in gm/km minus 100) divided by 100)
)
Multiplied by
30%


Some worked examples:

A Maruti Swift would be charged the following GST rate: (assuming CO2 emission is 113 gm/km)

18 % base GST
plus
Cess = ABS ((3.9-4)/4) + ((113-100)/100)) * 30 = 3.9%
Total GST = 21.9%

A BMW M340i would be charged GST as below, assuming length of 4.8 Meters and published emission numbers from spec sheet of 178 gm/km (BMW already provided CO2 values for every model and variant sold in India):

18% base GST
plus
Cess = ((4.8-4)/4) + ((178-100)/100) * 30 = 29.4%
Total GST = 47.4%

A Fortuner would be charged as below (Toyota does not disclose emissions in spec sheet - so assumed emissions of 228 gm/km based on internet sources for Fortuner 2.8D AT) and length of 4.8 meters:
18 % base GST
plus
Cess = ((4.8-4)/4) + ((228-100)/100) * 30 = 44.4%
Total GST = 62.4%

An Innova Hycross Hybrid would be charged (assuming 126 gm/km CO2 - based in internet research - the closest disclosed figure I could find was for the Corolla Cross hybrid sold in UK, with the same 2.0 engine and Hybrid system based on same platform that Innova Hycross uses) and length of 4.75 meters:

18 % base GST
plus
Cess = ((4.75-4)/4) + ((125-100)/100) * 30 = 13.1%
Total GST = 31.3%

An Full EV like Tata Nexon would only pay zero Cess, as it is less than 4 meters long and CO2 emissions is zero, and even if we consider imputed CO2 from the electricity consumed, it would still be way less than 100 gm/km.

This method and formula meets the needs of encouraging more efficient cars that pollute less, encouraging people to buy smaller cars where practical and yet, making sure the overall GST revenue collection does not suffer.

Born Electric Vehicles and other Full EVs would be charged very low Cess as the entire cess contribution due to emissions will be zero for them. This should keep Tata and Mahindra happy. When Maruti brings small hybrid cars, this would again be encouraged, as the Cess would be lower due to higher FE and lower emissions as well as small sizes. Those looking to buy large cars would be encouraged to go the Hybrid way, as it would result in massive GST savings. Those looking at large Diesel SUVs would think twice as the CO2 emissions of these cars are high and overall GST rates would be punitive.

Last edited by 84.monsoon : 20th June 2024 at 09:26.
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Old 20th June 2024, 12:09   #18
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Re: Toyota once again pushes for rationalization of GST rates | To make them Merit-Based

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Originally Posted by melhowl View Post
Thus taxation based on car size is not a solution. If govt. want to encourage smaller cars even more. More incentive should be given to smaller cars in parking.
Parking in city streets are taken as granted by us car owners, and that needs to end. Unless that is strictly enforced, there will be no marked induced demand reduction for bigger cars like you said.

Take Bengaluru for example, number of SUVs have increased multifold in the last 5 years, many have private parking spaces when at home and offices but when they go shopping they park in the streets and create a mess, just look before any Rameswaram Cafe.

Until street parking stops becoming a free for all, there will need to be top-down action to keep the car sizes sane to keep the cities at least barely liveable.

This is a bit of a strong opinion in an auto forum but we really need to think about the future of our cities over our love for cars.

Last edited by Yieldway17 : 20th June 2024 at 12:11.
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Old 20th June 2024, 17:35   #19
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Re: Toyota once again pushes for rationalization of GST rates | To make them Merit-Based

I get your sense. This reminds me of my city's policies upto a few years back. "Pallika Bazar" in my city had barriers which were not wide enough to allow bigger vehicles. There was also a ban on entry of any private four wheeler. So, the market space was essentially composed of on foot customers, some two wheelers and ocassional ricksaws carrying goods. This was way back around 2010s. Alas, Those restrictions are now gone.
Managing traffic is a local issue and should be handled at local level. There are multiple ways we can discourage haphazard encroachment by parked vehicles. The problem is not the size of cars. It is the chaos. Even smaller cars will not solve this congestion problem. Nobody buy a car just for grocery runs. A vehicle in India has to don multiple hats. So, instead of looking for a solution in taxation we should look at a solution at local level.
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Old 20th June 2024, 19:54   #20
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Re: Toyota once again pushes for rationalization of GST rates | To make them Merit-Based

One big miss with our current size based taxation is that it’s a flat 2 rate structure.

A 3.99m car will be taxed at around 29% total tax, which is bad but not terrible.

Now, a 4.2-4.3m which is an extremely popular size abroad (practical too) suddenly jumps to 43-45% tax.

Now you go to ultra luxury 5+m cars. You’d expect the tax to increase no? Absolutely not. The tax stays the same as the humble 4.2m car which makes no sense.

Add to it the complex situations when one condition doesn’t meet (like the Brezza having 1.5L engine but sub 4m) and still have to pay 43% tax.

IMO the tax should be gradual. If the government wants to incentivise small cars, it should be based on a gradient.

Something like 18% base rate + 1% for every 10cm above 3m. This would remove any incentive for a manufacturer to abruptly cut cars by 10-20cm just for tax breaks.
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Old 23rd June 2024, 11:01   #21
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Re: Toyota once again pushes for rationalization of GST rates | To make them Merit-Based

This is being foolish. What is the definition of merit?
1.) Safety
2.) Efficiency
3.) Length
4.) Fuel
5.) ….
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Old 23rd June 2024, 19:08   #22
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Re: Toyota once again pushes for rationalization of GST rates | To make them Merit-Based

INC joins pro hybrid campaign without naming any particular models.
IMO if they are so much confident on the tech , they should promote it atleast in the states they are ruling today.
Waiving off a whopping 6L road tax on a HYCROSS hybrid in KARNATAKA and TELANGANA will set a role model. IIRC some northern states already got few subsidies on the hybrids.

Also KARNATAKA is the only production state for hybrid mass market models.
Toyota once again pushes for rationalization of GST rates | To make them Merit-Based-screenshot_20240623172750.png

Last edited by TorqueIndia : 23rd June 2024 at 19:09.
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Old 23rd June 2024, 20:43   #23
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Re: Toyota once again pushes for rationalization of GST rates | To make them Merit-Based

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Originally Posted by TorqueIndia View Post
INC joins pro [/ATTACH]
Off topic:
Congress in Kerala are easily influenced when nudged the right way. Of all the problems the state faces, gst rates on powertrains should be bottom of the pile!
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Old 23rd June 2024, 21:53   #24
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Re: Toyota once again pushes for rationalization of GST rates | To make them Merit-Based

Quote:
Originally Posted by Raghuwire View Post
CNG vehicles give higher mileage and cut emissions by 20-25% (well to wheel model), still I don't see manufacturers trying to plead the government for lesser or more favourable tax structure. If you don't want the highest tax bracket of SUVs, please make small cars with hybrid tech! Sub 4m cars, mass market.
Correct me if I am wrong, but isn't it a massive safety issue? People like to point out that CNG has a higher ignition temperature than petrol but CNG in the tank is constantly under very high pressure which means it is explosive instead of flammable.
In case of any major accidents or failures with a petrol or diesel fuel tank, you will have to deal with leaking fuel or the car catching on fire. Accidents involving a CNG car involve the entire thing exploding, immediately vaporising whoever is inside the car as well as around it.
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Old 24th June 2024, 00:33   #25
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Re: Toyota once again pushes for rationalization of GST rates | To make them Merit-Based

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Originally Posted by Cresterk View Post
Correct me if I am wrong, but isn't it a massive safety issue? People like to point out that CNG has a higher ignition temperature than petrol but CNG in the tank is constantly under very high pressure which means it is explosive instead of flammable.
In case of any major accidents or failures with a petrol or diesel fuel tank, you will have to deal with leaking fuel or the car catching on fire. Accidents involving a CNG car involve the entire thing exploding, immediately vaporising whoever is inside the car as well as around it.
CNG tanks are very strong, more likely to see a Petrol/Diesel tank rupture and catch fire than a CNG tank.
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Old 24th June 2024, 02:20   #26
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Re: Toyota once again pushes for rationalization of GST rates | To make them Merit-Based

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Originally Posted by shortbread View Post
CNG tanks are very strong, more likely to see a Petrol/Diesel tank rupture and catch fire than a CNG tank.
Yes, they are strong and less likely to catch fire. My observation was in the case of accidents, especially at higher speeds, damage to the CNG tank would cause a very powerful explosion as the contents which are under extremely high pressure escape. Considering the amount of expressways we are churning out, I don't know if it's a good idea to move toward CNG.
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Old 24th June 2024, 05:07   #27
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Re: Toyota once again pushes for rationalization of GST rates | To make them Merit-Based

Any emissions based measurement system will only create more gray areas and corruption in the system. Specifying taxation based on engine, dimensions, fuel saving technologies and battery/charging specs (tangible things) is the way to go for now.

Perhaps some rebate or incentive can be added for gross emissions once they have a transparent emissions measurement system in place.
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Old 24th June 2024, 07:04   #28
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Re: Toyota once again pushes for rationalization of GST rates | To make them Merit-Based

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Originally Posted by reppy View Post
Any emissions based measurement system will only create more gray areas and corruption in the system. Specifying taxation based on engine, dimensions, fuel saving technologies and battery/charging specs (tangible things) is the way to go for now.
THIS. This the reason I believe none of the governments ever tried to go that way. People in India might call governments corrupt but sadly everything starts from bottom and it will be too easy for companies to fake emission data and not get caught. They will just have to pay some corrupt officials.

But on the other hand, it will be really easy to give tax rebates(either to individual or to the company directly) based on the size of battery packs in a Hybrid vehicle.
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Old 24th June 2024, 07:22   #29
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Re: Toyota once again pushes for rationalization of GST rates | To make them Merit-Based

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Originally Posted by Cresterk View Post
Correct me if I am wrong, but isn't it a massive safety issue? People like to point out that CNG has a higher ignition temperature than petrol but CNG in the tank is constantly under very high pressure which means it is explosive instead of flammable.
In case of any major accidents or failures with a petrol or diesel fuel tank, you will have to deal with leaking fuel or the car catching on fire. Accidents involving a CNG car involve the entire thing exploding, immediately vaporising whoever is inside the car as well as around it.
Well. Most of the cabs across big cities have been converted to CNG. I roughly estimate that atleast 25% of Maruti sales must be CNG. Tata has released that 10% sales are CNG. So it is already mainstream. This year 30% of trucks bought by company I work for was CNG, up from 5-6% last year. Also the safety issue was with after market fitments, with company fitted cylinders and setup, I believe it is safe!
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Old 24th June 2024, 10:09   #30
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Re: Toyota once again pushes for rationalization of GST rates | To make them Merit-Based

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Originally Posted by Cresterk View Post
Yes, they are strong and less likely to catch fire. My observation was in the case of accidents, especially at higher speeds, damage to the CNG tank would cause a very powerful explosion as the contents which are under extremely high pressure escape. Considering the amount of expressways we are churning out, I don't know if it's a good idea to move toward CNG.
CNG has very different properties to LPG. Even if a leak were to occur, the natural gas would dissipate into the atmosphere because it is lighter than air. Natural gas is not toxic or corrosive and doesn't contaminate. So this theory of the gas coming out of the ruptured tank, lying about, causing a big fire hazard is highly unlikely.

The absolute worst case scenario is this, in my opinion. Car meets with a massive accident, the supplementary petrol tank catches fire in the impact and the car is in flames. The prolonged heat due to the fire causes the CNG tank to explode.

Nonetheless, such a risk exists with every petrol and diesel cars as well. CNG safety isn't a worry when choosing a car powered by it, especially if it comes factory fitted.
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