GST Council may increase tax on old and used vehicles, including EVs, to 18%
In a move that could impact the resale market for old and used Electric vehicles, the GST Council’s Fitment Committee has recommended increasing the Goods and Services Tax (GST) rate on such vehicles from 12% to 18%.
This proposed hike would also apply to old and used electric vehicles (EVs), which are currently taxed at the lower 12% rate under notification No. 08/2018-Central Tax (Rate), dated January 25, 2018.
Currently, old and used vehicles are taxed based on the supplier’s margin, making the effective tax incidence relatively low. The GST rates are as follows: 18% for petrol, LPG, or CNG-driven vehicles with an engine capacity of 1200cc or more and a length of 4000mm or more; 18% for diesel vehicles with an engine capacity of 1500cc or more and a length of 4000mm or more; and 18% for sports utility vehicles (SUVs) with an engine capacity exceeding 1500cc. All other vehicles, including EVs, attract 12% GST.
