GST on Used Cars

GST on Used Cars

Originally used cars featured the same rate of GST as well as compensation cess as applicable to new vehicles. However the rates were subsequently brought down in order to boost the used car market. The currently applicable rates include 12% for smaller pre-owned vehicles i.e. petrol cars of engine capacity up to 1200cc and diesel cars of engine capacity up to 1500cc. The applicable rate of GST on used cars with engine capacity exceeding 1200cc for petrol and 1500cc for diesel cars is now 18%.

 

While lower GST rates compared to the earlier 28% have definitely helped, the most significant change has been the revision of rates applicable to compensation cess. As of 25th January 2018, compensation cess for all used cars irrespective of size was revised to nil in case no input tax benefit has been claimed under CENVAT credit or in lieu of any other taxes paid. The following is a representative list of taxes applicable to used car sales in India after implementation of GST on car (pre-owned) sales.

 

Type of Used Car GST on Used Vehicle Compensation Cess Total Applicable Tax
Petrol Car with engine capacity up to 1200cc 12% Nil 12%
Petrol Car with engine capacity over 1200cc 18% Nil 18%
Diesel Car with engine capacity up to 1500cc 12% Nil 12%
Diesel Car with engine capacity over 1500cc 18% Nil 18%

 

The above list is indicative and subject to periodic change.

 

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