How Would The Market React To The 2015 Budget Proposals?

[kush]

From what i know hybrid tax will come down for small cars will be 50% from current 60%.

Vezel should come down by Rs. 300k

Will let know by tom on the exact figure.

[kush]

Tesla price to come down

[g-unit]

fyi

http://europe.autonews.com/article/20141023/COPY/310239965/honda-after-5th-fit-recall-appoints-first-quality-czar-top-execs

[tcfern1]

But vat portion is not included in the 50% tax it will charge separately

Understood

[Rumesh88]

Don't get too excited.

<a href="http://imgur.com/CCbHWz7"><img src="http://i.imgur.com/CCbHWz7.jpg" title="source: imgur.com" /></a>

[Rohnd]

Today newspapers say that the Government expect more income than present from vehicle taxes, by introducing more vehicles to the country at lower tax rates. Good for common people & Motor Traders .

[mazda axela]

  On 10/26/2014 at 12:55 PM, KingSasanka said:

If people have nothing good to say, it is better not to leave negative comments (and show their true pedigree openly).

Thanks @ tcfern1 & B2Spirit.

+ 1

[arunajn]

  On 10/26/2014 at 2:15 PM, tcfern1 said:

But vat portion is not included in the 50% tax it will charge separately

Understood

But what is the effect of VAT reduction from 12% to 7%?

[matroska]

Ok looks like after that wave of honda fits our roads seem set to be flooded with another surge of Viva Elites and Maruti's and a plethora of vans. Pretty soon we wont have the roads to drive our price-reduced econo-boxes and I guess we will all take the train like our grandparents used to do.

[tcfern1]

Vat is 11% not 7%

[DCL]

Hi Guys, Any confirmation on what will happens to Honda Vezel Tax ? Some says it will go up? Some says it will go down!! Donno what to believe...

[arun-online]

Latest update from my frnd who engaged in vehicle import said, small cars (below 1000CC) and van price go down and no big affect for hybrids and normal cars. probably 15000 prices deduction may happen..

Edited October 27, 2014 by arun-online

[kush]

  On 10/27/2014 at 5:41 AM, DCL said:

Hi Guys, Any confirmation on what will happens to Honda Vezel Tax ? Some says it will go up? Some says it will go down!! Donno what to believe...

Marginal reduction, around 25-30k

[asrock]

http://www.ceylontoday.lk/51-76391-news-detail-vehicle-prices-drop-by-rs-80000-to-12m.html

[tinyman]

Today at EY Budget Brief, Prof. Attigale said that the the total tax on cars below 1000CC has been reduced to 173% from present 202% and for passanger VANs its brought down to 100%. Similar adjustments on other vehicles also.

I Just tried to reverse compute the price adjustment to the Maruti ALTO 800 priced at 1.85mn

Assuming 100k is the profit margin, the cost of the car including all the taxes is assumed to be 302% (100% CIF value + 202% taxes), now it would have become 273% (100% cost + 173% taxes) thus adjusted price would be,

(1.85mn - 0.1mn ) / 302% * 273% + 0.1mn = 1.68mn

If the importers sticked to their profit margin, the price should come down by 170,000.

since VAT is removed, when leasing the leasing companies will not be able to claim input vat, however there will be VAT on lease installments. therefore I guess it would be correct to say an additional 11% will be added to vehicles bought under new tax regime,when leased.

[B2Spirit]

  On 10/27/2014 at 7:06 AM, tinyman said:

since VAT is removed, when leasing the leasing companies will not be able to claim input vat, however there will be VAT on lease installments. therefore I guess it would be correct to say an additional 11% will be added to vehicles bought under new tax regime,when leased.

What is meant by VAT is removed ?

Does it mean we can forget that 11% altogether or is it gonna be charged in some other mechanism ?

[MoneyMaker]

There are no significant changes to the vehicle tax reductions. Changes are only applicable for electric vehicles and Van's and the VAT reduction of 1% is applicable for all vehicles imported in the future.

[tcfern1]

Vat is charged separately when clg

[Crosswind]

  On 10/27/2014 at 7:06 AM, tinyman said:

Today at EY Budget Brief, Prof. Attigale said that the the total tax on cars below 1000CC has been reduced to 173% from present 202% and for passanger VANs its brought down to 100%. Similar adjustments on other vehicles also.

I Just tried to reverse compute the price adjustment to the Maruti ALTO 800 priced at 1.85mn

Assuming 100k is the profit margin, the cost of the car including all the taxes is assumed to be 302% (100% CIF value + 202% taxes), now it would have become 273% (100% cost + 173% taxes) thus adjusted price would be,

(1.85mn - 0.1mn ) / 302% * 273% + 0.1mn = 1.68mn

If the importers sticked to their profit margin, the price should come down by 170,000.

since VAT is removed, when leasing the leasing companies will not be able to claim input vat, however there will be VAT on lease installments. therefore I guess it would be correct to say an additional 11% will be added to vehicles bought under new tax regime,when leased.

Even sales managers at A*W hasn't come up with the new pricing structure

[tinyman]

  On 10/27/2014 at 8:57 AM, B2Spirit said:

What is meant by VAT is removed ?

Does it mean we can forget that 11% altogether or is it gonna be charged in some other mechanism ?

At the point of import there was 12% VAT charged. this VAT can be claimed by Leasing Companies, thus if you go for a 100% leasing, the leasing company would claim the respective input VAT and the lease value would be only the amount excluding VAT. When you pay lease installments,; Leasing company would charge you VAT on installment, which is called Output VAT. by the time you fully repay your lease, you would have ended up paying VAT on the value of the vehicle and on the interest payments made so far.

Now the VAT on import point in fully removed & replaced with Excess Duty, which means there won't be no VAT claimable by leasing companies when doing a leasing. thus the lease value will be inclusive of all the taxes. No changes made on the VAT on lease installments. Therefore, when you are to pay installment VAT will be charged.

Given that you get a vehicle lease of same value, your new installment will be at least higher by 11%

Edited October 27, 2014 by tinyman

[MkX]

So many worries about tax.

It’s a decision after all. Am I buying a car for the money I have in my hand or should I wait till possible tax reduction in next month? I am for one who just buy what I can afford and live happy. Just saying.

[Luckyj]

It seems nothing major will happen after all and nothing special for Hybrid vehicles.

below 1000CC cars will have the 25% tax reduction, but I heard that there will be appx. 10% reduction in prices of below 1500CC vehicles as well. This can be due to new tax structure.

Anyway better to wait few weeks or even till end of this year, till things get cleared and settled.

[kushan]

  On 10/26/2014 at 1:19 PM, kush said:

From what i know hybrid tax will come down for small cars will be 50% from current 60%.

Vezel should come down by Rs. 300k

Will let know by tom on the exact figure.

Vezel comes down by 50K

  On 10/27/2014 at 8:57 AM, B2Spirit said:

What is meant by VAT is removed ?

Does it mean we can forget that 11% altogether or is it gonna be charged in some other mechanism ?

Now only Excise duty, no more VAT, Custom duty, NBT etc..

http://www.ceylontoday.lk/51-76391-news-detail-vehicle-prices-drop-by-rs-80000-to-12m.html

[The Don]

Governmet getting more tax due to more imports is not as black and white as you might think, because with imports your foreign currency reserves go down, which affect the Rupee, which can make imports more expensive and leave the country in a situation it cannot import basic essentials due to lack of money...........

The SL Rupee is not a tradeable currency so the only way foreign currency (here the most important currency is the dollar which is used to trade most comodities like oil, gas and various raw materials) is through exports, and through loans and foreign aid......

So the strategy in place before however derided by the automotive community was the right one if this is the objective and this is just an election ploy. They will have to revert to that at some point to stabilise the economy, so the moral of the story here is, once the reductions start to take effect, those who were waiting to buy vehicles should complete, as it is unclear how long the window will be left open.

Also in terms of reduction, people need to understand the difference between percentage and percentage points. For example a reduction from a 200% tax to 175% tax is not a 25% reduction but a 25 percentage points reduction. The actual percentage of reduction in that scenario is 12.5%

[KingSasanka]

@ Thanks Mazda Axela & the Moderator for very enlightening reply.