18% GST on all Old and used Vehicles and Cars
Current Situation:
- Currently, a 12% GST rate applies to the sale of most old and used vehicles, including electric vehicles (EVs).
- However, some vehicles already fall under the 18% GST bracket:
- Petrol vehicles with engine capacity ≥ 1200 cc and length ≥ 4000 mm.
- Diesel vehicles with engine capacity ≥ 1500 cc and length ≥ 4000 mm.
- SUVs meeting specific criteria.
Proposed Change by the 55th GST Council Meeting:
- Increase the GST rate on all other old and used vehicles (including EVs) from 12% to 18%. This means a wider range of used vehicles will be taxed at the higher rate.
Key Points to Note:
- Margin-Based GST: GST applies only to the supplier’s margin, which is the difference between the purchase price and the selling price (or depreciated value if depreciation is claimed). This means the tax is levied on the profit made by the seller, not the total value of the vehicle.
- Unregistered Persons Excluded: This change does not apply to sales by unregistered persons. This typically means individuals selling their own vehicles are not affected.
Potential Implications:
- Increased Revenue: This change could generate more tax revenue for the government.
- Higher Prices for Buyers: The increased GST rate could lead to higher prices for buyers of used vehicles.
- Impact on EV Adoption: Increasing the GST rate on used EVs could potentially discourage their adoption, as it makes them relatively more expensive compared to conventional used vehicles.
Overall:
This proposed change aims to standardize the GST rate on used vehicles by bringing a larger category under the 18% bracket. While it could increase government revenue, it might also impact the affordability of used vehicles, particularly EVs.