GST Council ups tax on sale of used cars by businesses

Dec 21, 2024

Synopsis
The GST council met on Saturday. It decided to not tax gift vouchers. Used cars purchased by businesses will face an 18% tax. This includes electric vehicles. The tax on fortified rice kernels is reduced to 5%. A decision on insurance product tax rates is postponed. The council clarified tax rates for different types of popcorn.

The council decided to raise the rate of tax to 18% from 12 % for all vehicles including EV’s which will be applicable only on the value that represents margin of the supplier, that is, the difference between the purchase price and selling price (depreciated value if depreciation is claimed).

At present, all old and used vehicles including EVs (other than petrol vehicles of engine capacity of 1200 cc or more and of length of 4000 mm or more, diesel vehicles of engine capacity of 1500 cc or more and of length of 4000 mm and SUVs) attract 12% GST. Old and used petrol vehicles of engine capacity of 1200 cc or more and of length of 4000 mm or more, diesel vehicles of engine capacity of 1500 cc or more and of length of 4000 mm and SUVs attract 18%. The council has now approved making this rate uniform at 18% for all vehicles, including EVs.

The Group of Ministers (GoM) on GST compensation cess is likely to get a six-month extension till June 2025, to submit their report. The compensation cess regime comes to an end in March 2026, and the GST Council has set up a panel of ministers, under Union Minister of State for Finance Pankaj Chaudhary, to decide the future course of the cess.

[The Economic Times]