18% GST On Used Cars: In the 55th meeting of the GST Council held in Jaisalmer, Rajasthan under the chairmanship of Finance Minister Nirmala Sitharaman, many issues were discussed and major decisions were taken.
18% GST On Used Cars: The market for old and used vehicles in the country has increased a lot. Many companies are selling old vehicles at low prices, but a big decision was taken in the 55th meeting of the GST Council held in Jaisalmer, Rajasthan on Saturday regarding the tax levied on the sale of these old vehicles. In fact, in the GST Council meeting, a consensus has been reached on increasing the tax on the sale of old vehicles including electric vehicles (EV). It has been agreed to increase it from 12 percent to 18 percent.
This proposal approved in the council meeting
According to the report published on Business Today, the changed GST rates will be applicable on transactions related to old cars sold by companies or dealers. Meaning, these revised rates by the Council apply to vehicles sold with margin and purchased by companies working in this sector. However, tax will remain applicable at the rate of 12 percent on individuals selling or buying old vehicles. That is, there will be no effect on individual buyers and sellers.
Tax according to engine and length
Talking about the current rates, 18% is applicable for vehicles running on petrol, LPG or CNG with engine capacity of 1200CC or more and length of 4000MM or more, 18% for diesel vehicles with engine capacity of 1500CC or more and length of 4000mm or more, and 18% for sports utility vehicles (SUVs) with engine capacity of more than 1500CC. In such a situation, the decision of the GST Council to increase the GST rates to 18% for old and used vehicles of this category is in line with the existing tax structure for large vehicles and SUVs. According to the change, now old electric vehicles (EVs) and other 12% taxed vehicles will be included in the 18% bracket when resold by businesses.
Meeting chaired by FM Sitharaman
The GST Council meeting is being held in Jaisalmer, Rajasthan under the chairmanship of Finance Minister Nirmala Sitharaman. Finance ministers of all the states are also present in it. Let us tell you that before the meeting, the Fitment Committee of the GST Council had recommended increasing the Goods and Services Tax (GST) rate on old and used vehicles from 12% to 18%. Till now GST is applied on these vehicles on the basis of supplier’s margin, which makes the tax burden relatively less.
Sale of old EV may be affected!
Currently, 5% GST is levied on new EV vehicles to bring growth in this sector, but now 18% GST has been agreed upon on resale of old electric cars, which may reduce its attractiveness among second-hand EV customers and may reduce demand. 18% GST rate is already applicable on input parts and services used for repair and maintenance of second-hand vehicles.
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