Why is there so much difference in ex-showroom and on road price of the car
Ex-showroom vs on-road price: When you plan to buy a new car or bike, you often hear about two different prices: ex-showroom price and on-road price. Both of them show the price of the term vehicle, but there is a difference.
It is important to understand what these prices are, what is included in them and where does the money exceeding the ex-showroom price go? Today we are going to tell you through this news that there is a difference between these two.
What is an ex-showroom price?
Ex-showroom price is the basic price that is decided by a vehicle manufacturer or dealer. This is the price that appears in advertisements, brochures or online listing for vehicles in the showroom. This includes some charge.
Manufacturing Cost: This includes the cost of production, research and development and logistics of the vehicle. This is the amount that the manufacturer has spent in making the vehicle.
GST: 28% GST applies to cars in India (up to 5–18% on electric vehicles). This tax is included in the ex-showroom price.
Dealer Margin: The dealer adds a margin of up to 2-5% for his operational expenses, employee salary and profits. For this reason, ex-showroom price in different cities is also low.
For example, if the ex-showroom price of a car is Rs 7 lakh, it includes the cost of the manufacturer, GST and the dealer's margin. However, this price is not enough to run the vehicle on the road, because it remains to be charged many compulsory and alternative charges.
What is an on-road price?
The on-road price is the total amount that you have to pay to bring the vehicle home from the showroom and run it on the road legally. This ex-showroom is always higher than the price, as it includes many additional charge and tax.
road tax: This is a tax imposed by the state government, which can be 4-15% of the ex-showroom price. This state rate varies from state and vehicle types (petrol, diesel, electric). For example, in Delhi, 12.5% road tax is levied on cars worth less than Rs 10 lakh and more than 10 lakh rupees.
Registration Fee: It is mandatory to register every vehicle in the Regional Transport Office (RTO) in India. This process includes the cost of obtaining number plate and registration certificate (RC). This tax can range from Rs 5,000 to 20,000 on the basis of engine size and state.
Insurance amount: According to the Motor Vehicles Act, 1988, at least third-party insurance is mandatory for every vehicle. In addition, comprehensive (comprehensive) insurance can also be taken, which provides protection from accidents, theft and natural disasters. The insurance premium depends on the vehicle price, model and driving history, which can usually be 2-3% of the ex-showroom price.
Handling and Logistics Charge: Some dealers charge an additional charge to bring the vehicle from the factory to the showroom or to deliver the customer. These charge are optional and can be reduced through interaction with the dealer.
Tax Colored at Source (TCS): The dealer charges 1% TCS on cars worth more than Rs 10 lakh, which goes to the government. In some states, up to 25% green cess is imposed on diesel vehicles.
Where does the rest of the money go?
The difference between ex-showroom and on-road price is due to many compulsory and alternative charges.
In the official treasury: Taxes like road tax, GST, TCS and green cess go directly to the central or state government. These are used for tax road maintenance, environmental protection and other public service. The registration fee goes to the RTO, which is used for the registration and number plate of the vehicle. The insurance premium goes to the insurance provider, which is responsible for compensating the damage to the vehicle and third party.
Dealership: The cost of handling fees, accessories and maintenance package goes to the dealer. However, in some cases these money can be reduced through dialogue. In this way, the on-road price can be about 17% more than the ex-showroom price. However, this is just an example. On-road and ex-showroom price is less according to the city and dealership.
How to reduce price
The difference between ex -showroom and on road price can be reduced. This includes insurance amount, accessory price and all things. Always make a budget keeping in mind the on-road price, because this is the amount that you will really have to repay.
Source: www.tv9hindi.com
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