GST on Used Cars Increased to 18%: What It Means for Buyers and Businesses
GST on used cars has increased to 18%, but individual buyers can relax—this hike targets businesses. Here’s how the decision reshapes the used car market dynamics. Here’s a breakdown of the developments and their impact.
GST on used cars raised to 18%, affecting businesses but sparing individual buyers. Learn who’s impacted, why the market may slow, and what this change means for you.
Key Decision from GST Council
- The 55th GST Council meeting, chaired by Finance Minister Nirmala Sitharaman, decided to raise the GST on used cars.
- The tax rate increased from 12% to 18% for specific categories of vehicles.
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Impact on Buyers
- Cars already taxed at 18% remain unaffected:
- Petrol/CNG/LPG cars: Engine capacity over 1200cc and length above 4000mm.
- Diesel vehicles/SUVs: Engine capacity over 1500cc.
- The change primarily impacts vehicles currently taxed at 12%, including electric vehicles (EVs).
Why Individual Buyers Won’t Be Affected
- The higher tax applies only to businesses selling or buying used cars claiming depreciation benefits.
- Individual buyers and sellers remain unaffected unless they are dealing with a business entity.
Impact on Businesses
- Businesses involved in trading, repairing, or maintaining used cars for resale will face the higher tax burden.
- Companies relying on depreciation benefits may need to adjust policies to mitigate the financial impact.
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Industry Concerns
- Experts believe the revised tax rate could slow down the used car market.
- Businesses must adapt to these changes, which may indirectly influence market dynamics.
This move aims to streamline tax regulations while limiting its effect on regular buyers. However, businesses in the used car industry may face challenges due to the increased tax rate. The GST hike impacts businesses trading used cars, but individual buyers remain untouched. The used car market faces shifts—discover how it may influence future trends.
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