Thu Dec 26 08:50:00 UTC 2024: ## GST on Used Vehicles Hiked to 18%, Causing Uncertainty Among Buyers and Sellers
**New Delhi:** The Goods and Services Tax (GST) Council’s decision to increase the GST rate on used vehicles to 18% has sparked widespread debate across India. The revised rate, announced at the 55th GST Council meeting, applies to all used vehicles sold by registered businesses, including electric vehicles. However, private individuals selling their used cars will not be affected by this change.
This decision comes amidst a booming used car market in India. Many believe the government aims to capitalize on this growth to increase its revenue. While the stated aim is to streamline tax rates across different vehicle types, Finance Minister Nirmala Sitharaman’s clarification on the matter has left buyers and sellers unsure about the implications.
The minister explained that GST will be levied on the margin—the difference between the purchase price and the resale price. For example, if a vehicle purchased for ₹12 lakh is resold for ₹9 lakh, the 18% GST will only apply to the ₹3 lakh margin.
However, this clarification has raised questions about margin calculation and whether the GST increase will ultimately harm sellers. Concerns remain regarding the practical implementation of determining the margin and its potential impact on the used car market. The increased GST is expected to lead to higher prices for used cars sold by registered dealers, potentially impacting consumer demand.
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