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Taxes on Buying New Car. Compute Total Tax on Car Cost in India

Taxes on Buying New Car. Compute Total Tax on Car Cost in India

Taxes Breakup in Buying a Car including GST+ Road Tax + Taxes as Part of Car Ownership. Breakup Composition in Hatch, Sedan, Luxury Cars as Ownership Costs

 

Taxes in Buying New Car

Car Ownership is a matter of Joy and Pride for the Car Owner

But - other than it - is also a matter of Joy for Government - as they make Huge Revenue not only at time of Purchase but at Ownership too

Although we are in Post GST Regime and unlike Pre GST Scenario having multiple taxes

» Excise Duty 

» VAT

» Infrastructure Cess

» CENVAT

» Entry Tax / Octroi / LBT

are all merged as part of GST - but as a Car Owner its Important to assess in how much Taxes do we pay 

Prices of Some Models

» Toyota Fortuner - On Road is now 30 Lakh+ 

» Honda City Diesel - Price Range is from 10 Lakh to 14 Lakh

» Premium Diesel Hatchback - Polo and Elite I20 now cost 8 Lakh+ 

» No Car as of now is under 5 Lakh Price (On road) in Indian car market which has ABS and Dual Airbags as Safety Specs

To find out the Taxes 

Apart from paying Tax on procuring parts from Vendors -

» Excise Duty is Component of Ex-factory Price 

» VAT and Entry Taxes are Charged and is Component of Ex-showroom Price

» State Road Tax is charged and is component of On Road Price of Vehicle

Taxes at Time of Buying Car

Component Rate (including Cess) Classification Beneficiary
GST 29% Small Petrol Cars under 1.2 Litre engine Central Government & State Government
  31% Diesel Cars with Engine < 1.5 Litre
  43% Cars with Engine > 1.5 Litre  
       
Road Tax 3% to 24% Based on Vehicle Pricing - Differential in every State State Transport Department

 

 

Taxes as Part of Ownership (Post Purchase)

Component Rate
Taxes on Fuel 45% to 55%
   
GST on Insurance Premium 18%
   
GST on Labor Charges 18%
   
GST on Spare Parts - Tyre, Battery, Spare Parts 28%
   
Service Tax on Loan Foreclosure 18%

Rebates

Top of it for Salaried - there are no Income Tax Rebates or Deductions for Owning a car or Interest Payable on Car Loan , for Self Employed - yes if the vehicle used for business purpose - they can claim depreciation as non cash expense

DeMystify Prices of Cars - Based in Delhi

  Maruti Swift Vxi ABS Honda City SV Diesel Toyota Fortuner 4x4
       
Exshowroom 5.72 Lakh 10.68 Lakh 28.2 Lakh
Insurance 17K 28K 73K
Road Tax with MCD Parking Fees, Number Plate & Smart Card  28K 1.39 Lakh 3.57 Lakh
On Road 6.17 Lakh 12.35 Lakh 33.5 Lakh
       
Tax Component      
GST (as Factory Price) 1.12 Lakh 2.8 Lakh 6 Lakh
Road Tax 28K 1.39 Lakh 3.57 Lakh
GST on Insurance Premium 3K 4000 11K
  1.43 Lakh 4.23 Lakh 9.68 Lakh
       
On Road Price without Tax 4.74 Lakh 8.12 Lakh 23.82 Lakh
Taxes Paid 1.43 Lakh 4.23 Lakh 9.68 Lakh
Tax Proportion 30% 52% 40%

 

Fuel Taxes as Running Cost

Kms Driven Avg Mileage Litre Used Fuel Bill Taxes Proportion
70000 Kms Driven - Petrol Car 14 Kmpl 5000 Lit 3.25 Lakh 1.7 Lakh
100000 Kms Driven - Diesel Car 17 Kmpl 6000 Lit 3.25 Lakh 1.45 Lakh

 

Additional would be GST on Annual Maintenance in terms of GST on Spare Part Prices, Insurance Premium

With these High Taxes - it seems that Buying a Car is turning out to be a huge contribution to Government Ex-chequer in Development, Revenue of the Government

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Important: If you seek advise or recommendation, pls raise query in Car Forum instead of posting in comments

 

Comments 4

Guest - Anon on Thursday, 14 February 2019 22:18

politicians eating all the tax money

politicians eating all the tax money
Guest - Arnaab on Thursday, 19 April 2018 16:55

Good information

Good information
Guest - Shree on Sunday, 03 December 2017 09:44

Hi,
Can a self employed get some tax treatment for the initial Down Payment required by the car loan vendor?
Regards
Shree

Hi, Can a self employed get some tax treatment for the initial Down Payment required by the car loan vendor? Regards Shree
Guest - Karthik Kanthimath on Tuesday, 12 September 2017 01:33

Awesome information about fuel and car taxation... Thanks a lot.

Awesome information about fuel and car taxation... Thanks a lot.
Guest
Monday, 17 June 2019

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