"New GST Rates on Used Cars Explained |"Understanding the 18% GST on Used Car"

In its 55th meeting on December 21, 2024, the GST Council of India revised the Goods and Services Tax (GST) rates on used cars. Previously, used petrol cars with engine capacities up to 1200 cc and diesel cars up to 1500 cc were taxed at 12%, while larger vehicles attracted an 18% GST. The Council has now standardized the GST rate to 18% for all used cars sold by registered dealers, including electric vehicles (EVs).
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Impact on Buyers:

Purchases from Registered Dealers: When buying a used car from a registered dealer, the applicable GST is now uniformly 18%. This tax is calculated on the dealer's margin—the difference between the purchase and selling prices—not on the car's total value. For instance, if a dealer buys a car for ₹5,00,000 and sells it for ₹5,50,000, the GST would be 18% of the ₹50,000 margin, amounting to ₹9,000.
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Direct Individual Transactions: Sales conducted directly between individuals remain exempt from GST. Therefore, purchasing a used car directly from its owner does not attract this tax.
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Considerations:

Electric Vehicles (EVs): Notably, the GST rate for used EVs sold by dealers has increased from 12% to 18%, while new EVs continue to attract a lower GST rate of 5%. This discrepancy may influence buyer decisions in the pre-owned EV market.
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Market Dynamics: The uniform 18% GST rate could impact the pricing strategies of used car dealers and potentially affect the overall demand in the pre-owned vehicle market. Buyers may need to assess the total cost implications when purchasing from dealers versus direct transactions.

These changes aim to streamline the taxation process for used vehicles, ensuring a consistent tax structure across different car categories. Prospective buyers should consider these factors when making purchasing decisions in the used car market.
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Disclaimer:
The information provided in this video is for general informational purposes only and is based on the latest updates available at the time of recording. We do not guarantee the accuracy or completeness of the information, and it should not be considered as professional tax or financial advice. Viewers are advised to consult with a qualified tax consultant or refer to official government notifications for personalized guidance related to GST and taxation. The creators of this video are not liable for any actions taken based on the content provided.
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