Big Drop in GST on Used Cars in India

GST on used cars has been reduced significantly to just 12-18%. Before this recent update, the slabs varied between 29-54.7%. The changes are valid from 25 January 2018 while these lower and upper percentage figures are for small used cars (12%) and large used cars (18%) respectively.

This change was passed in 25th meeting of GST council in New Delhi. They even discussed on ways to make GST fillings easier. The cess applied on top of actual values in now removed while total GST value has also gone down considerably for used cars. Dealers were paying these values on their margins after selling the car.

New GST on Used Cars

• Small Cars – 12%
• Large Cars – 18%

Organised sector of used cars in India was under real pressure from the last high values of taxes on older cars. The council even reduced taxes on public vehicles using bio-fuel and claimed the new e-bill system to get ready by Feb 1, 2018. Indian automobile market saw GST as a relief when it was first launched back in July 2017.

Prices for most products were reduced but few months later, changes were made to bring things back on track with added cess values to the presently applied GST levels. Slabs start from as low as 5% but went higher to 28% for selected sectors like automobile.

Apart from the sub 4 meter petrol cars, almost every other car manufactured in India attracts a cess over this 28% GST value. This is the highest for SUV segment as buyers have to pay 53% GST on each product.

This means that car belonging to this category will cost almost INR 20 lakh to manufacturer and whooping INR 30+ lakh to the buyer. After that, buyers has to pay almost 11% of the value as road tax and other essentials. That counts to almost 64% in terms of overall taxes over the value.