Optimizing Car Payment: Guidance Needed for Hyundai Creta N Line Top Varaint.

[_amit_]

my dad in a partner is partnership fir so can he also claim the deduction. cause car would not be in my name.

The owner of the car claims the depreciation. A company/firm can also claim the tax exempt for a car used by its directors.
One can also purchase the car in the name of the firm too.
Consult with your CA about which way would be the best for yo based on your scenario as its not clear who is buying it.


Thats why you will find that most of the luxury cars are in the name of the company because you claim exemption not only on interest but on depreciation.

 

[ankurarora898]

Hello, we purchased an ev last month too.Some very good discounts are being offered on the 2023 stock,do check. On Xuv400 you can get more than 4 lakhs plus some other offers on the 2023 stock + paying with card can get huge benefits.If you have magnus burgundy that can be very helpful and as mentioned above if you purchase before 31st march you can claim 7.5 depreciation against income tax for this year too.

 

[vaibhav111]

You can negotiate processing fee also. If you have hdfc preffered or imperia a good portion of processing fee is waived. But if you plan to take hdfc loans, you must check preclosure fee. Hdfc preclosure fees are pretty high.

In future if interest rates drastically increases or you have a lot of cash but don't have investment opportunity or may be want to decrease debt exposure for home loan or something, you must have a way out. So preclosure Clause is pretty important.

hmmm hdfc loans?

 

[vaibhav111]

1. Definitely ice >>>>ev any day. Hyundai is reliable, fun to ride. But not safe and little expensive to maintain(depends on service centre). But I am sure you have read reviews and have your priorities. So we shouldn't delve into those.
2. As you have your own business you should register it under firm's name. Registration and insurance is higher but depreciation benefit will cover it very easily. Technically it should be used only for firm's business and should have direct value addition but As long as you aren't putting a lot of vehicles in firms name it shouldn't be a problem. Even if the advance was paid under your father name, you can still change, no issue as long as they haven't registered the car.
3. Buying on emi isn't such a bad idea. Cuz you can claim the interest as expense. as per your tax bracket you save a portion of that interest expense. So instead of paying cash if you invest that capital, you will definitely earn more. Also everyone has fy target, you could get a good deal.
4. If you pay through credit card also you can save good amount. Most dealer will ask for 1.5-2%. But you can negotiate it. Many people have paid full amount through card without paying anything extra. Depends on negotiation. But it will be tough for a car in high demand like Creta. Still you should be able to get it down to 1%. Which you can recover during bill payment using hdfc esp/indusind/idfc wealth/rbl etc.

Your infinnia will give 3.3% right? Best way is to pay advance through cc. Most of the time they Don't ask for extra during booking. Once they accept CC even for a small amount, they are bound to accept for rest. It is not a legal issue. But if they don't accept it, it nullifies their business agreement with bank, which can cancel their pos machine.

It also helps to find mcc code to calculate what will be final return. You can also ask if dealer is accepting prepaid cards. That will give you better return. you can buy some this month and rest next month.

5. It's true right now interest is at highest. So floating rate will be beneficial in long run. But do check what is the reference rate. And how frequently the rates change. Also you have to check in case of interest change, will emi be constant. What they do in case of interest increase, is they keep the emi constant. So term increases. And you end up paying much more. Also they don't even inform while doing so. Many people got screwed during financial crisis and even during covid because of this.

6. You can negotiate processing fee also. If you have hdfc preffered or imperia a good portion of processing fee is waived. But if you plan to take hdfc loans, you must check preclosure fee. Hdfc preclosure fees are pretty high.

In future if interest rates drastically increases or you have a lot of cash but don't have investment opportunity or may be want to decrease debt exposure for home loan or something, you must have a way out. So preclosure Clause is pretty important.

thanks for the detailed answer.

 

[vaibhav111]

Hyunday has poor safety ratings as per GNCAP

out of 5 star rating isn't it 3 rated?

 

[sidp]

out of 5 star rating isn't it 3 rated?

3 is pretty poor. Even 4 isn't good in highway. Know that these are rated at 64kmph only. In real life scenario it will be at least twice ( even thrice in case of head on collision ).

hmmm hdfc loans?

I mean car loan. Don't go for loan providers of dealer. They keep a cut. You should always get insurance and loan directly. Do ask for break up. They must be charging 40-50k extra for insurance. And get a 0 dep+rsa+ engine cover top ups.

 

[CARDBITRAGE]

whatttttt.. i can.. damn.. alright would research on this. and ask CA. now regarding business purpose I'm buying cause i sold my car cause it was now 9yr+ old and needed one car only. so not buying car just for the purpose of business but business is evolved for sure. my dad in a partner is partnership fir so can he also claim the deduction. cause car would not be in my name.

Yup. The best time would be to buy and register the car by March 31st. You'd get 7.5% depreciation this FY and 15% in the next FY. If it is a proprietorship(sole owner) firm, it can be registered in your personal name. Otherwise, it needs to be registered under your firm's name if it is a partnership, PVT LTD, LLC, LTD, etc. Don't worry about it being used for the business. Every business owner in India buys cars for both their personal and business use.
Your CA probably will disallow a portion of the depreciation every year, but still is a good benefit.

 

[_amit_]

For loans:

• Do check for foreclosure. Private banks are notorious for charging fees when one tries to close the loan early so do confirm this if going with banks like HDFC. Make sure you are not being charged. The agreement would be a very long document so not sure you will be reading it all, so keeping small email threads with bank manager is usually better.

• You can also negotiate with interest rates. Like if a bank gives minimum 8.75%, you can ask for 20 points less. What they will do in this scenario is keep the rate as is as they can not change it, but can write you a cheque or give you cash on the difference.

• Some banks have offers on processing fess. Like SBI was not charging any processing fees a year ago and 50% discount on some loan types, not sure about now though.

 

[paxauquabriba-4876]

My 0 cent,
Don't take input from so called influencer on deprecated assets etc.

You can put it on loan and use your working capital in assets for capital gains which can offset the loan interest easily.

can you please explain in layman terms with simple numbers ?

 

[paxauquabriba-4876]

anway of making a FD etc to earn interest to use the same for emi & may be even register in bisiness name to get added benefits ?

 

[sidp]

thanks for the detailed answer.

You can also claim gst tax credit in 1st year itself. But this is only for capital goods. So need to keep the car for >5yrs.
If you claim it and sell off within couple of years, itd can reclaim that gst plus pretty high interest plus fine. So clarify that from CA before hand.

 

[sidp]

anway of making a FD etc to earn interest to use the same for emi & may be even register in bisiness name to get added benefits ?

If you want to do fd then don't go for car loan. It only make sense if you have better investment opportunity. So if you are not getting at least 12-13% you shouldn't think about. Return wont compensate for all the extra effort you put.

This method is for people who use the capital for working capital in their business or trading.

 

[CARDBITRAGE]

You can also claim gst tax credit in 1st year itself. But this is only for capital goods. So need to keep the car for >5yrs.
If you claim it and sell off within couple of years, itd can reclaim that gst plus pretty high interest plus fine. So clarify that from CA before hand.

Not all businesses can claim the GST component and only a select few businesses are allowed GST ITC. Examples: Tour agencies, taxi companies, car rentals, driving schools, etc.

 

[sidp]

Not all businesses can claim the GST component and only a select few businesses are allowed GST ITC. Examples: Tour agencies, taxi companies, car rentals, driving schools, etc.

I don't think the resource has to be central to the business. But true there are exceptions. We can't claim gst itc on everything.

Also even if something is eligible to claim, doesn't mean we should. Many CAs advise to not be too greedy.

Therefore I told to get clarification from CA, cuz ITD notice with interest and fines are much bigger issue due to wastage of time & stress they cause.

 

[CARDBITRAGE]

I don't think the resource has to be central to the business. But true there are exceptions. We can't claim gst itc on everything.

Also even if something is eligible to claim, doesn't mean we should. Many CAs advise to not be too greedy.

Therefore I told to get clarification from CA, cuz ITD notice with interest and fines are much bigger issue due to wastage of time & stress they cause.

I was speaking specifically about vehicles. You can claim GST only if one is involved in the transportation of goods or people. But yes, whenever one claims GST, it is better to consult your CA whether it is allowable.