Is the above understanding correct? I think I must surely be missing something.
BHPian sayakc recently shared this with other enthusiasts.
As I went through it, my eyes popped out literally on the amount of taxes that contributed to the ex-showroom price. For example, if I consider an SUV like a Tata Safari, the GST is 43%. So if the ex-showroom price of a car is Rs, 20 lakhs, then the GST is Rs. 8.6 lakhs. Based on the above, I have the following questions:
1. Is the above understanding correct? I think I must surely be missing something.
2. If true, it also means that the manufacturing cost (including profits) of a 20 lakh ex-showrooom car is Rs. 11.4 lakhs. A common man is forced to pay a significantly higher amount to purchase, solely due to the tax. Coming to the tax, is the amount of taxes charged “normal”/”higher”/”lower” when compared to other countries?
Considering that after a house, the car is the second most valued asset in the family, the GST disparity (5% vs >=29%) seems out of proportion.
Would welcome comments from the experts!
Here’s what BHPian Leoshashi had to say on the matter:
Yes, it’s true. I was a bit amused too when I saw the breakup of the value of my XL6. For a car whose Ex-Showroom value is Rs. 10.41 lakhs, more than 3 lakhs goes towards the tax. If one considers the on-road price, which was Rs. 11.9 lakhs including insurance, warranty, road tax, registration etc., the total tax amount easily crosses the Rs. 4 lakh mark!
PS: Your calculations seem a bit off. If 43% tax is taken and the amount reaches Rs. 20 lakhs, then the approximate ex-factory cost should be around Rs. 14 lakhs.
Here’s what BHPian Turbanator had to say on the matter:
I think OP has taken references from old data. Currently GST on automobiles is even higher as the government corrected that anomaly where post GST prices were lower than the VAT regime.
Have a look at the current cess. So on luxury cars and SUVs, it should be net 48-50% (28% basic plus 20 or 22% cess).
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