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When you are going to buy a car of Rs 10 lakhs, you have naturally earned this income from somewhere and hence you have to pay income tax @ 30%. Hence, even before you have ordered for car, you have perhaps paid aroundRs 3,00,000 as Income tax.
2: Indirect Taxes
When you buy a car, there are different types of taxes levied by Central and State government. I am giving you the break of the taxes for one such car i.e. Honda City SMT Diesel of similar price
Ex-showroom 940500
Insurance 24848
Road Tax with MCD Parking Fees, Number Plate & Smart Card 87244
Logistics 6250
On Road 1058842
Tax Component
Excise + VAT 210000
Road Tax 82293
MCD Parking Fee 4000
Service Tax 2800
On Road Price without Tax 759749
Taxes Paid 299093
Tax Proportion 39.37%
You pay around Rs 3 lakhs as indirect tax.
3: Tertiary Taxes
When you pay Rs 10, 00,000 to the car dealers, it is used to make profit to the company where they pay corporate tax @ 30%. Part of it is paid as salaries to the employees, who pay personal income tax. Hence, you can assume that at least Rs 1,00,000 is paid more as taxes.
Hence, government gets almost RS 7,00,000 as taxes when you purchase a car of around Rs 10,00,000.
