Used car GST rates slashed from 29-54.7% to 12 & 18%

Before the budget of 2018 is presented, the GST council has announced that used cars will now be taxed at 18% and 12% for large and small cars respectively, down from the current 29-54.7% (including cess). These rates will be effective from January 25.

In the 25th meeting of the GST council that took place on January 18 in Delhi, the GST rates on over 29 different items were reduced. Further, the cess applied on top of the GST rate for used cars was also removed. This means that the earlier rates inclusive of cess have now been reduced significantly. The council also discussed on ways to simplify the GST filings in the future.

Currently, the used car dealers are paying the GST + cess amount on their margins when selling the car. This had made the tax on used cars even higher than what it was when only VAT was levied. The GST Council's announcement will come as a welcome relief to the organized sector in the used car business. Before this announcement, used cars were categorized in the same segment of new cars, which attracted steep rates of 29-54.7% depending on the vehicle.

In case of individuals selling their cars to other individuals or dealers, no GST is applicable but when dealers sell the car to individuals or dealers, GST is applicable on the margin amount. The council also reduced the rates on bio diesel, public transport buses that run on green fuel as well as environment friendly bio-fuels. The finance minister Mr. Arun Jaitley also told that the e-way bill is on track to be implemented from 1st February 2018.

GST was introduced in April 2017 to simplify the taxation and reduce the multiple levies on products as well as services. Motor vehicles were placed in the highest slab and luxury cars attracted an additional cess over the GST rate.

Source - TOI