Taxation

How you end up paying 106% taxes for Hyundai Creta; Base Model- 7.5L ; Government Taxes- 8L

Why are cars becoming expensive for Salaried Middle Class ?

Actual Price of the Creta Base Model- 7.5 Lakhs
Total Taxes (Direct + Indirect Taxes) -8L
You end up paying 106% taxes on Hyundai Creta’s Base model.

How Government is levying various taxes on Salaried Employees in India lets check out in detail.

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Sales of Cars below 10L is decreasing

As per the Maruti Suzuki chairman, Sales of the cars below 10 lakhs have been gradually decreasing
The reason is that Indians are getting obsessed with the SUV car segment.

Hyundai Creta – 1/3 rd Market share in SUV car segment

Hyundai is the 2nd largest car manufacturer in India with 15% market share.
In SUV segment, Hyundai has captured more than 50% market share in India.
Hyundai Creta has captured 33% market share in SUV car segment which means creta has captured 1/3 rd market share in SUV cars.

3 Different options for buying a Hyundai Creta

When you Buy Creta with Full Payment – 13 Lakhs
When you Buy Creta on Loan – 15 Lakhs
Salaried Employee buys Creta on Loan – 18.2 Lakhs

When you Buy Creta with Full Payment – 13 Lakhs

	Actual Car Price	7.5 Lakhs
a)	GST (28%)	2.1 Lakhs
b)	Cess (17%)	1.2 Lakhs
	Ex Showroom Price	11 Lakhs
c)	RTO (Mumbai) (12%)	1.3 Lakhs
d)	TCS @1%	11 Thousand
	Insurance	58 Thousand
	On Road Price	13 Lakhs
a+b+c+d	Indirect Tax (a+b+c+d)	4.8 Lakhs

For a 13 lakhs Creta , you have to pay 4.8 Lakhs as Indirect taxes, means you end up paying 37% Indirect taxes on Total Price of the car.

2. When you Buy Creta on Loan – 15 Lakhs

80% people in India end up buying cars on loan.
8 of out every 10 people in India buys car on loan

	On Road Price	13 Lakhs
a)	Down-payment (20%)	2.6 Lakhs
b)	Loan for 4 years @9.15%	10.3 lakhs
	Car EMI	25 Thousand
c)	Bank Interest	2 Lakhs
a+b+c	Cost of Car	15 Lakhs

3. Salaried Employee buys Creta on Loan – 18.2 Lakhs

Now if you are buying Creta on Loan & if you are a salaried employee then this is the worst scenario.

For buying creta on Loan, cost of car is 15 lakhs so considering 15 lakhs as in-hand salary.
In order to get 15 lakhs as in-hand salary, you have to pay 3.2 lakhs as direct taxes

106% Taxes on Creta Base Model

This is how, Government is earning 8Lakhs behind every 7.5 lakhs Creta.

And this is main reason, cars are getting so expensive for salaried middle class in India due to the high tax burden. Though we are paying so much taxes in India but there is no significant return on investment from the government side.

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