Karnataka Transport Department Begins Crackdown On Luxury Car Dealers

Updated: Wednesday, May 15, 2019, 15:22 [IST]

Luxury car dealers are nor reluctant to register high end cars because the Transport Department at Karnataka insists on registering vehicles at the ex-showroom price fixed by manufacturers. Dealers have been registering vehicles at actuals on invoices, meaning at the price after discounts.

According to Economic Times Auto, This reluctance by dealers is causing a lot of inconvenience to customers who have paid for the vehicles and are now waiting for registration and delivery.

Karnataka Cracks Down On Luxury Car Dealers

The transport department decided that registration of vehicles at the ex-showroom prices on the 6 March 2019, and now they've woken up and have decided to take action against dealers who are violating the rules. The transport department is also investigating registrations of vehicles done by the luxury car dealers over the years. Since high end cars draw more taxes, the department is primarily targeting luxury car dealers in the city.

Sources say that most dealers issue invoices after factoring in discounts, exchange rates, or loyalty offers on the ex-showroom prices. Dealers usually provide discounts and freebies between Rs 15,000 and Rs 70,000 for small cars, and between Rs 1 lakh and Rs 5 lakh for high end cars. Discounts are based on sales and therefore are not uniform.

VP Ikkeri, Commissioner for Transport and Road Safety, said, "Motor Vehicle Tax being deposited on discounted value of luxury vehicles cause huge revenue losses. We are not against dealers giving discounts or offers to customers, but they should pay Motor Vehicle tax based on the ex-showroom price fixed by manufacturers."

He also stated that the department is now scrutinizing taxes paid by the dealers on the sale of luxury vehicles over the years. "We could check the ex-showroom price through the websites of vehicle manufacturers as well as the Vahan 4 database. We will take action against errant dealers if there are huge discrepancies. For instance, if there is an abnormal difference like Rs 5 lakh to Rs 10 lakh, then we will take action against those dealers," he said.

VP Ikkeri also said that registrations of luxury cars has reduced since March. "Many dealers are not coming forward to register their vehicles after we started checking the ex-showroom price and actual invoice," he said.

Sources said dealers of luxury cars like Audi, BMW, Mercedes-Benz, Lexus, Range Rover, Jaguar and Lamborghini are under the transport department's scanner. "We are targeting dealers selling vehicles worth above Rs 20 lakh. For instance, for a vehicle costing more than Rs 20 lakh, the registration fee is about 20% of the ex-showroom cost, which translates to about Rs 4 lakh. When they undervalue the sale of vehicles, they pay lesser tax. We will impose penalty or cancel their trade license," said a transport department official.

A luxury car dealer in the Central Business District said: "Vehicles have been registered for several years at the actual invoice after discounts on the ex-showroom price. But the transport department's move will only increase the price of vehicles and they will go to other states to register their vehicles. We are registering vehicles of owners who are ready to pay higher taxes."

Thoughts About The Government Crackdown On Under-Pricing

About time! Law in India is always created but seldom enforced. Dealers have been under-pricing luxury for years now and it is obvious that some one (or more than one) at the transport department was making a little some some on the side. Hopefully this change remains and every one starts paying their dues. The Transport Department seems to function like the cops in a Bollywood flick, no?