Are the taxes in your repair and service bill going to the government?
Have you looked closely at your automobile repair & service bills, and re-checked the vast variety of taxes and other charges levied on everything—from spare parts to lubricants to labour charges? Chances are that you haven’t, because much of this comes as computer-generated fine print and is extremely confusing, like your cell-phone bill.
Yes, some workshops may give you an option of avoiding taxes, if you’re not taking a bill. That’s not something I wish to even comment on. I’m writing about citizens who insist on a bill. Or workshops which will insist on presenting the complete bill; you have no option but to accept it, especially if using the services of this authorised workshop is a condition of warranty, extended warranty or, in some cases, even insurance.
You are, therefore, tied in to accepting a full bill with all taxes and charges—Central, state and local—added on. These can be as much as 30% of the total amount, at times.
Over the past few months, I have been asking manufacturers directly, as well as using my own sources to drill deeper, on whether the money, we, as customers and citizens, pay as taxes on spare parts, consumables and labour, is actually going back to the government or not. Some manufacturers respond and are very transparent about explaining the process as well as the checks & balances, while some are evasive.
Manufacturers dealing with the mass market appear to be complying with the law, especially the top six which have been around in India for decades. I don’t want to name them as some of them have given me this information ‘in confidence’.
The luxury car and bike manufacturers, especially a couple of the newer ones, however, acted coy. The buzz is that they have brilliant evasion schemes in position. These are also the ones which are not listed, operate as subsidiaries and appear to be under the impression that it’s they who make the rules.
This is roughly how it works. The manufacturer has a network of authorised dealers and garages. In actual fact, the service & repair is done by a similarly named outfit which provides the bill, which is not the actual entity mentioned as the authorised garage; that’s where the diversion, as well as evasion, takes place.
If you want to protest, here is what to do. Scan the copy of your latest automobile garage bill and file an RTI application with the department of revenue asking for information on whether the specific money collected as taxes and service tax from you was remitted to the government or not. Even better, file a public grievance online, stating that you have reason to believe that the taxes and service tax charged may not have been remitted to the government.
If just a few of us do this, everybody will fall in line because there is no economic crime worse than collecting taxes from us but not remitting it into government coffers.
Make Private Transport Costlier
What should the new government do for the automobile sector? Better and easier public transport and easier movement of goods and people across the country should be a focus area. It should also make private transport costlier. If this is so, there will be more disposable income in people’s hands which they may or may not spend on luxury vehicles for themselves. But the one segment of the market that was buying higher-end vehicles as though they were going out of fashion was the Government of India. It should move back to more sensible cars. If the favourite vehicles of the new prime minister are any indication, then anything bigger than a Mahindra Scorpio will simply not be preferable. Let’s hope.
(Veeresh Malik started and sold a couple of companies, is now back to his first love—writing. He is also involved in helping small and midsize family-run businesses re-invent themselves.