GST Council Ups Tax on Used Cars: Why It Will Impact Businesses Not You - Details

GST on EVs: The Goods and Service Tax Council, headed by the Union Finance Minister Nirmala Sitharaman , had announced a surge in GST rates for the used EVs and second-hand vehicles sold through businesses. According to the 55th GST Council Meeting, the Finance Minister and other representatives of the state and UTs decided to hike the GST rates from 12 per cent to 18 per cent. As per the meeting, the revised GST rates will not affect the individual sellers. Before the tax hike announcement, the second-hand electric vehicles attracted 12 per cent GST.

In the meeting, Nirmala Sitharaman also said that new EVs will attract a 5 per cent GST slab, and the council aims to promote EV adoption.

GST on Vehicles Sold by Individuals:

According to the Finance Minister, GST will not be levied on second-hand vehicles purchased or sold by individuals.

GST on Vehicles Sold by Businesses:

As per the GST Council Meeting, 18 per cent GST will imply on the margin value, which is the difference between the purchase and selling prices.

How will these new GST rates impact new customers?

Currently, before the tax hike, used ICE vehicles and EVs attracted a 12 per cent GST. Despite this, petrol cars with an engine capacity of 1200cc or bigger and a length of 4000mm or more and diesel vehicles with an engine capacity of 1500cc or more and a length of 4000mm or more attract an 18 per cent GST.

For instance, a buyer purchasing a second-hand EV from a dealership will have to pay six per cent extra GST compared to buying from individual sellers.

The new change in the GST rates will impact the registered used-car dealers in India. The latest hike in the GST tax rates can widen the gap, as a significant portion of the second-hand car market is conducted through unorganised and unregistered sellers.

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