Hyderabad: Luxury cars often bought ‘second hand’ to evade taxes

HYDERABAD: Many of the luxury cars in the city were passed off as second-hand cars with a whole corrupt system in place to work out tax evasion and other cost benefits, officials said.
Authorities say that more than a 1,000 luxury cars, which cost more than Rs 4 crore are plying in the city, even as enforcement authorities approach the Centre to chalk out a plan to nab more luxury cars plying in the state without paying taxes. Right from the Ferraris to the super expensive Rolls Royce Phantom, the city has a good number of these vehicles plying on the roads.
The first ever seizure of luxury cars in the city was carried out two days ago when 15 cars were apprehended, of which 11 were found to be plying without paying road taxes. Imported luxury cars cost anywhere between Rs 5 crore and Rs 15 crore. However, all the cars caught by the enforcement wing of the Road Transport Authority were second hand cars with an average cost of Rs 4 crore.
So how is the cost brought down by an average of Rs 2 crore depending on the overall cost of the car?

Non-payment of life tax or registering in states where the taxes is minimal is one way, which almost all of the 11 vehicles seemed to have used. Another way is to buy the cars as second-hand vehicles, showing the overall reduction in invoice price.
“Luxury cars is a totally different segment. Usually a person who can afford to buy a luxury car does not go for a second hand vehicle. While it is possible to get second hand cars for much cheaper, buyers prefer buying new one’s sourced from the right places which can be brought for much less than the original value as well. It is done by undervaluing the car and getting clearance through customs and evading road taxes,” explained an insider from the luxury cars industry.
West Asia, incidentally, is the biggest exporter of these cars—many a times used barely for days before being put up for sale. Also, buyers of luxury cars like to rotate their cars often—almost every six months—which gives them another reason for evading taxes. “This section of buyers are usually the affluent and young. For them upgrading the car every few months is almost a given and hence many try to evade taxes as they don’t intend to keep them for long,” added another source.