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TMI BlogCHANGES IN GST ON OLD OR USED VEHICLESX X X X Extracts X X X X X X X X Extracts X X X X ..... CHANGES IN GST ON OLD OR USED VEHICLES X X X X Extracts X X X X X X X X Extracts X X X X ..... lers, small cars etc. The rate was already 18% for sale of old and used petrol vehicles of engine capacity of 1200 cc or more & of length of 4000 mm or more, diesel vehicles of engine capacity of 1500 cc or more & of length of 4000 mm and SUVs. Thus, GST shall now be @ 18% uniform rate on old vehicles w.e.f. 16.01.2025. However, this rate hike will only apply to supply of such vehicles by register ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed tax payers in ordinary course of business and not by unregistered taxpayers. The GST Council has only simplified the tax structure and proposed a single rate of GST @ 18% on supply / sale of all old and used vehicles including electronic vehicles (EV's). This is not a new tax levy. These vehicles would be small car models comprising about 50 percent of used car market. This will also cov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er electric vehicles (EVs). The Council's recommendations as per PIB release dated 21.12.2024 are: * Rate of GST shall be increased from present 12% to 18% on sale all used and old vehicles including electronic vehicles (EVs) * This increase will exclude specified vehicles already being taxed old / used @ 18%, i.e., sale of old and used petrol vehicles of engine capacity of 1200 cc or more & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of length of 4000 mm or more; diesel vehicles of engine capacity of 1500 cc or more & of length of 4000 mm and SUVs. * EV's shall be taxed @ 18% where as new EV's are taxed at a lower rate. * GST shall not be applicable on the value of supply but only on the positive margin amount i.e., difference between purchase and selling amount. * GST is applicable only on the value that represents Marg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in of the Supplier, that is, the difference between the Purchase price and selling price (depreciated value if depreciation is claimed) and not on the value of the vehicle. Also, it is not applicable in case of unregistered persons. Change in Nutshell Coverage Used & old Vehicles EV's Covered now Common / single rate 18% (CGST + SGST) Who will pay Only registered persons Individual / per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sonal supply No GST Depreciation Margin to exclude depreciation Negative margin No tax tax on what value Margin, i.e., difference between consideration and depreciated value on date of supply Valuation Rule Rule 32(5) of CGST Rules, 2017 already provides that where a taxable supply is provided by a person dealing in buying and selling of second hand goods i.e., used goods as such or after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such minor processing which does not change the nature of the goods and where no input tax credit has been availed on the purchase of such goods, the value of supply shall be the difference between the selling price and the purchase price and where the value of such supply is negative, it shall be ignored. GST Rates GST rates are prescribed in Notification No. 1/2017-CT (Rate) dated 28.06.2017. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vide Notification No. 8/2018-CT (Rate) dated 25.01.2018, Central Tax on intra-State supply of following goods was exempt from so much of tax as per Notification No. 1/2017-CT (Rate) as is in excess of amount calculated at following specified rates, on the value that reports margin of the supplier: Chapter, Heading, Sub- heading or Tariff item Description of Goods Rate 8703 Old and used, petr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ol Liquefied petroleum gases (LPG) or compressed natural gas (CNG) driven motor vehicles of engine capacity of 1200 cc or more and of length of 4000 mm or more. The specification of the motor vehicle shall be determined as per the Motor Vehicles Act, 1988. 9% 8703 Old and used, diesel driven motor vehicles of engine capacity of 1500 cc or more and of length of 4000 mm The specification of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e motor vehicle shall be determined as per the Motor Vehicles Act, 1988. 9% 8703 Old and used motor vehicles of engine capacity exceeding 1500 cc, popularly known as Sports Utility Vehicles (SUVs) including utility vehicles. SUV includes a motor vehicle of length exceeding 4000 mm and having ground clearance of 170 mm. and above. 9% 87 All Old and used Vehicles other than those mentioned ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove 6% Vide Notification No. 4/2025-CT (Rate) dated 16.01.2025, Notification No. 8 stands amended w.e.f. 16.01.2025 to the effect tax 6% rate in residual entry shall be substituted by 9%. Thus, GST rate on old and used vehicles taxable at 6% Central Tax (12% total) has been increased to 18% w.e.f. 16.01.2025 implying that GST on all old and used vehicles including EV's shall now be 18% (9% Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral, 9% State). While a new car attracts lower GST on total value, used car will now be subject to 18% GST but only on margin or differential value in terms of Rule 32(5). Impact While this change will not have an impact on individual sellers, it will have a tax impact on organized used car sale market like Maruti True Value, Cars 24 etc who buy from individuals, spend some money on reconditio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning or refurbishing of vehicle and sell the same. Since the tax burden will be passed on to the ultimate buyer, it will be a cost hike for ultimate buyer. Since the tax would be on the margin amount (difference between buying cost or depreciated value if deprecation is claimed and selling price). X X X X Extracts X X X X X X X X Extracts X X X X
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