GST Council clarified that no new tax will be imposed on Old and Used cars
Earlier on Tuesday, government sources said that the GST Council has not recommended the imposition of any new tax for old and used vehicles in the recent meeting. The experts clarified that the GST Council has simplified the tax rate and recommended unifying and prescribing a single rate of GST on the sale of all old and used vehicles including EVs at 18%. In the past, the GST on old and used vehicles was levied at different rates. However, the GST Council has now decided to prescribe a single rate of 18% on the sale of all old and used vehicles, including Electric vehicles (EVs).Meanwhile if an individual sells an old and used car to another individual (i.e., a private sale), GST will not apply. For registered persons who have claimed depreciation under Section 32 of the Income Tax Act, 1961, GST will be payable only on the margin. The margin is defined as the difference between the consideration (selling price) received for the vehicle and its depreciated value on the date of sale.Furthermore in any other cases, GST is payable only on the value that represents the margin of the supplier i.e. the difference between selling price and the purchase price. Again, where such margin is negative, no GST is payable. EY Tax Partner Saurabh Agarwal said the GST Council has recommended increasing the GST rate on old and used EVs and small fossil fuel cars from 12 per cent to 18 per cent, data-aligning it with the rate for larger cars and SUVs.