Is HAL inefficient? Should Govt. split it?

[Sakal Gharelu Ustad]

ook
here we go

customs duty on import : max is 28% - but for defence items purchased through International Competetive Bidding - aka MMRCA international competetion it is 0 ( yes Zero)

Excise duty : it is 12.36% - can be waived

Vat : as per state laws -
inerstate 2% CST

income tax : effective tax rate 30%
minimum alternate tax :20%

so at the most
HAL will pay
excise duty : 12.36%
VAT / CST : as per state laws / 2%
Income tax : 30%

total : 44.36%

AT THE LEAST HAL will pay

Excise Duty : 0 - if it is waived
VAT / CST : as per state laws / 2%
Income tax / MAT : MAT 20%

at the least HAL will pay :22%

while imports in ICT aka MMRCA will be duty free

that also explains why flyaway (direct imports - rafaels made in france) of rafale will be cheaper than those mfg by HAL in India

what is applicable to import v/s domestic mfg of Su30MKI is also applicable to Rafales

Links here

read page nos 24 through 30

https://www.pwc.in/assets/pdfs/publications/2013/changing-dynamics-final-copy-feb-4-2013.pdf

i hope that settles one point

And Russia/France imposes no tax/duties on their local manufacturing. All countries apply that and by that logic India applies less than most developed countries.

I think the logical thing would be to compare manufacturing cost with manufacturing cost or delivery cost with delivery cost in both cases. And not manufacturing cost in Russia with delivery cost in India.

 

[PaliwalWarrior]

And Russia/France imposes no tax/duties on their local manufacturing. All countries apply that and by that logic India applies less than most developed countries.

I think the logical thing would be to compare manufacturing cost with manufacturing cost or delivery cost with delivery cost in both cases. And not manufacturing cost in Russia with delivery cost in India.

all countries including india provide export incentives in various forms

i.e. either waiver of taxes (indirect / direct both ) and even cashsubsidies ( eg india provides to sugar mills on export of sugar )

why are getting confused with mfg costs & delivery costs ?

when dasault quotes a figure of say 73 million / rafale for 18 rafales in flyaway condition to india under MMRCA it is delivery costs to inida including all taxes to be paid in france as well as india

and when HAL quoted the price to IAF for rafale mfg by HAL in india it is all inclusive

inclusive of all taxes to be paid

same with Su30 supplied directly from russia and Su30MKi mfg in india

AT THE MINIMUM the price of Su30MKI mfg by HAL in india will go up by 22% simply because of taxes

at the maximu it will go up by 46% just due to taxes

now you agree ?

 

[PaliwalWarrior]

yeah right. We must take into account the customs tax, excise tax , income tax, XYZ tax for bonus for calculating MANUFACTURING COST of the aircraft manufactured within India .


The source you have given already states that military equipment meant for use by the govt is exempt from most of the taxes. Do you even read want you post?

the exemption is available in

customes category : which benfits direct imports not local mfg

excise : the govt may waive so for Su30MKI i have takex excise as 0%

pl check my posts

 

[Sakal Gharelu Ustad]

same with Su30 supplied directly from russia and Su30MKi mfg in india

AT THE MINIMUM the price of Su30MKI mfg by HAL in india will go up by 22% simply because of taxes

at the maximu it will go up by 46% just due to taxes

now you agree ?

But for the above comparison you need to deduct taxes on Russian side. Then Russian manufactured Su-30MKI would cost 150 crores instead of 240crores excluding taxes. When you deduct taxes- deduct them on both sides. When you compare final price- include taxes on both sides.

Now again compare with the cost quoted by HAL. It will remain around 50% or more in both cases.

 

[Mad Indian]

the exemption is available in

customes category : which benfits direct imports not local mfg

excise : the govt may waive so for Su30MKI i have takex excise as 0%

pl check my posts

The costs quoted in the article were not the procurement costs of Rus vs India. It was the manufacturing costs of Su30 in Rus and Su30 in India. Customs/excise/XZ you have claimed have no place here. Keep peddling..

 

[Mad Indian]

But for the above comparison you need to deduct taxes on Russian side. Then Russian manufactured Su-30MKI would cost 150 crores instead of 240crores excluding taxes. When you deduct taxes- deduct them on both sides. When you compare final price- include taxes on both sides.

Now again compare with the cost quoted by HAL. It will remain around 50% or more in both cases.

Am I missing something here? Where does the 22% cost increase in taxes come from again?

 

[Sakal Gharelu Ustad]

Am I missing something here? Where does the 22% cost increase in taxes come from again?

He is counting taxes on Indian side, but ignoring everything on russian side. And then he is comparing the prices by deducting taxes for one country and not in the other!!

 

[Mad Indian]

He is counting taxes on Indian side, but ignoring everything on russian side. And then he is comparing the prices by deducting taxes for one country and not in the other!!

yeah but, where does the number 22 come from. According to the link, only VAT is not claimed to be exempted on the Manufacturing. And Vat in Nashik, Maharashtra is 4% for this type of products. So where exactly is the number 22% coming from?

BTW, VAT in Rus is 10-18% which makes the HAL that much more incompetant

 

[Sakal Gharelu Ustad]

yeah but, where does the number 22 come from. According to the link, only VAT is not claimed to be exempted on the Manufacturing. And Vat in Nashik, Maharashtra is 4% for this type of products. So where exactly is the number 22% coming from?

BTW, VAT in Rus is 10-18% which makes the HAL that much more incompetant

Read this post: http://defenceforumindia.com/forum/...n-fighter-aircraft.8276/page-193#post-1088072

 

[Mad Indian]

Read this post: http://defenceforumindia.com/forum/...n-fighter-aircraft.8276/page-193#post-1088072

Seriously how does one add income tax to the cost of manufacturing? Thats why I asked from where does the number 22% come from

 

[Sakal Gharelu Ustad]

Seriously how does one add income tax to the cost of manufacturing? Thats why I asked from where does the number 22% come from

Why are you asking me? Ask @PaliwalWarrior .

I know his posts made no sense. I do not even need to do calculation because he was comparing apples with oranges.

 

[Mad Indian]

Why are you asking me? Ask @PaliwalWarrior .

I know his posts made no sense. I do not even need to do calculation because he was comparing apples with oranges.

Nah. Just showing how stupid the whole argument was.

For instance :


So if I run a company producing 1 crore worth goods , giving a salary of 20L, should I count the income tax paid by my employees as my manufacturing cost? If my employess pay 10% income tax from their salary, does that mean I am spending 22L on my employees as they pay 2 L income tax on their 20L salary?

And The 20% MAT is paid on the profits the company makes, and so how the hell does that even come into play here? I mean, how does 20% tax on profit margin translate to 20% tax on manufacturing? And since when did HAL make profits worth shit?

 

[PaliwalWarrior]

22 % comes from the lowest slabs

Excise : 0
vat : 0
CST : 2%
Income Tax "0
MAt : 20%

total 22%

also i forgot to add one more tax Dividend Distribution tax

when HAL pays dividend to GoI - it pays DDT to GoI on the dividend

that too it has to recover from its customer

 

[PaliwalWarrior]

Seriously how does one add income tax to the cost of manufacturing? Thats why I asked from where does the number 22% come from

rs 358 crore is not the cost of manufacturing Su30mki

it is the price at which HAL sells the su30MKI to govt

second

when a co pays a tax to govt that is recovered from the customer by increasing the price of product

 

[PaliwalWarrior]

HAL made a profit of 4400+ crores in 2013-2014 since then it has increased

HAL paid a dividend of rs 885 crores to Govt of India in 2013 -14

and paid a DDT of 155 crores on this dividend on top of all taxes it paid the govt

 

[PaliwalWarrior]

Nah. Just showing how stupid the whole argument was.

For instance :


So if I run a company producing 1 crore worth goods , giving a salary of 20L, should I count the income tax paid by my employees as my manufacturing cost? If my employess pay 10% income tax from their salary, does that mean I am spending 22L on my employees as they pay 2 L income tax on their 20L salary?

And The 20% MAT is paid on the profits the company makes, and so how the hell does that even come into play here? I mean, how does 20% tax on profit margin translate to 20% tax on manufacturing? And since when did HAL make profits worth shit?

the income tax is paid on the profits that the company makes

if a company makes profit less than 18% of its turnover / sales

then it pays

MAT - minimum Alternate Tax- which is 20% of its turnover

 

[Mad Indian]

22 % comes from the lowest slabs

Excise : 0
vat : 0
CST : 2%
Income Tax "0
MAt : 20%

total 22%

also i forgot to add one more tax Dividend Distribution tax

when HAL pays dividend to GoI - it pays DDT to GoI on the dividend

that too it has to recover from its customer

Spoken like a true AAP supporter. MAT cant be added to the manufacturing cost.

Since you are an AAPian, let me explain it in a way a 7th grader can understand, If I manufacture X for 100 Rupees without any tax, and I pay 2% VAT. My total manufacturing cost is 102Rupees. This manufacturing cost is inclusive of the labour charges and the raw materials and VAT . Now, If I sell it for 122 Rupees, I have made a 20 Rupees profit. It is in this 20 Rupees I need to pay 20% MAT. SO I will pay 4 Rupees in MAT. So my end profit is Rupees sixteen rupees. This is what MAT actually means.

But, if we apply your method of adding MAT and VAT to manufacturing costs, then the total costs for me for manufacturing X after taxes would be 122 Rupees. This is why your 22% tax claim is retarded.

Now ,I can understand what kind of people support AAP

 

[Sakal Gharelu Ustad]

Spoken like a true AAP supporter. MAT cant be added to the manufacturing cost.

Since you are an AAPian, let me explain it in a way a 7th grader can understand, If I manufacture X for 100 Rupees without any tax, and I pay 2% VAT. My total manufacturing cost is 102Rupees. This manufacturing cost is inclusive of the labour charges and the raw materials . Now, If I sell it for 122 Rupees, I have made a 20 Rupees profit. It is in this 20 Rupees I need to pay 20% MAT. SO I will pay 4 Rupees in MAT. So my end profit is Rupees sixteen rupees. This is what MAT actually means.

But, if we apply your method of adding MAT and VAT to manufacturing costs, then the total costs for me for manufacturing X after taxes would be 122 Rupees. This is why your 22% tax claim is retarded.

Now ,I can understand what kind of people support AAP

His premise is false even before talking about taxes.

He wants to compare (HAL cost - taxes) with (Sukhoi cost).

 

[PaliwalWarrior]

His premise is false even before talking about taxes.

He wants to compare (HAL cost - taxes) with (Sukhoi cost).

nobody has quoted sukhoi costs or HAL costs

what they have quoted is costs to india / IAF = selling price of both sukhoi as well as HAL

 

[Sakal Gharelu Ustad]

nobody has quoted sukhoi costs or HAL costs

what they have quoted is costs to india / IAF = selling price of both sukhoi as well as HAL

So why deduct HAL taxes for comparison and not Sukhoi's?