I am trying to understand the various taxes and duties imposed on automobiles in India. Please bear with me because I am a noob and a little out of touch with the Indian car scene.
1. Import Duty on CBUs (Completely Built Units) is 110%. Is that right? I am assuming a CBU enters the country fully assembled including wheels?
2. Import duty on CKDs (Completely Knocked Down) is 55%. Is this right? How do we define a CKD? I am assuming all the parts needed to assemble a car are shipped in a crate and just the assembly takes place in India. What is the rationale behind taxing CKDs at a much lower rate than CBUs? Is this because the GoI (Government of India) wants to encourage the companies to open up plants in India to assemble cars and generate employment?
3. On what numbers are the above tax rates applied? On the price of the car in the country it is manufactured in? Let's suppose a car ImportedCar is imported from HomeCountry where its suggested retail price Rs 1000. By the time ImportedCar comes to India, it costs 1000 + 1.1(1000) = 2100. I see a couple of problems with this. First, doesn't the 1000 include the profit margin for the manufacturer in HomeCountry? Their actual manufacturing cost may be much lower. Second, what if ImportedCar is not sold in HomeCountry at all but is just manufactured there. Bottomline, how exactly does the GoI determine the real value of ImportedCar?
Or does the GoI back-calculate the import duty based on the price of the car in India? I doubt this is the way it works.
4. What the hell is ex-factory price? How does one arrive at ex-showroom price from ex-factory price? I know ex-showroom price varies from state to state but, typically, how much money in percentage terms does the GoI - state or central - devour? What are those taxes called? Does ex-factory price also vary from state to state and if yes, is there some ex-baseline price which is the same throughout the country?
Do CBU and CKD cars have ex-factory prices too?
5. Excise duty. From what I know, it is 20%. Is it also applied on CBUs and CKDs? I know that cars less than 4m in length AND powered by a petrol engine smaller than 1.2L or a diesel engine smaller than 1.5L have only an 8%. So, as long as you stick to the capacity restrictions, you can turbocharge, sypercharge or some other charge, and still pay only 8%, right. What on earth is excise? Is it only applied on cars in India? Lastly, on what number is this duty applied on - exFactory or something else?
6. On the Road Price. How does one get from ex-showroom to OTR price? Sales tax? Is there any lifetime road tax? Any other lifetime or yearly tax? I keep hearing terms such as VAT, Octroi etc. What are they and where in the taxation hierarchy are they applied? I know all these vary by state, so please give me some ballpark numbers.
Is there some resource anywhere which compares the tax rates across all the states?
7. This is if I missed anything you think I will be interested in. Insert your own question and answer it
I count at least 25 question marks in my post. Please answer them one at a time with links to official GoI documents, if possible
. And no, don't ask me to search the forums, I already did.