Buying a big car in India is not a simple matter. The price of a car is lakhs of rupees, but due to the tax and cess imposed on it, it becomes even more expensive. Many people do not know how much tax has to be paid on the purchase of a car and how much the government earns from it. Let us explain to you the complete math of tax and cess imposed on Mahindra Thar.

GST and Cess on Car

According to the government, when you buy a new car, you have to pay 28 percent GST (Goods and Services Tax) on its registration. Apart from this, extra cess is also levied depending on the category of the car. The rate of cess can be from one percent to 22 percent. This cess is different for different segments. Especially, this rate is even higher on diesel vehicles.

Tax rates on hatchbacks, luxury and SUVs

18% GST is levied on hatchback cars. On the other hand, 22% cess is also levied on luxury vehicles and SUVs along with 28% GST. This additional cess makes these cars even more expensive.

Tax Calculation on Mahindra Thar

The base price of a popular SUV like Mahindra Thar is Rs 11 lakh 65 thousand. 14 percent state tax and 14 percent central tax is levied on it. The total of these two taxes comes to about Rs 3 lakh 26 thousand. Apart from this, 20 percent cess is also levied on this car, which is about Rs 2 lakh 33 thousand.

TCS, Road Tax and Insurance

After this, TCS (Tax Collected at Source) of Rs 17,240 and road tax of Rs 2 lakh 19 thousand is also levied on this car. Apart from this, there is also the cost of insurance, which is around Rs 1 lakh. Combining all these taxes, cess and other expenses, the total price of Mahindra Thar becomes around Rs 20 lakh 60 thousand.

Impact on government's income and your pocket

From this entire calculation, it is clear that the government earns a lot of money in the form of tax and cess on the purchase of a car. On the other hand, the customer has to spend a lot more money from his pocket, which is much more than the actual price of the car. In India, it becomes difficult to fulfill the dream of buying a big car because due to tax and cess, their price becomes out of the reach of the common man.

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