Thu Dec 26 06:02:40 UTC 2024: ## GST Council Hikes Tax on Used Car Sales, Including EVs

**New Delhi** – The GST Council has approved a significant increase in the Goods and Services Tax (GST) rate on used car sales, impacting both electric vehicles (EVs) and petrol/diesel cars. The new 18% GST rate will apply to the *margin* earned on sales of EVs and larger petrol and diesel cars.

This change affects petrol cars with engines exceeding 1,200 cc or a length over 4,000 mm, and diesel cars with engines exceeding 1,500 cc or a length over 4,000 mm, including SUVs. Smaller vehicles will remain subject to the current 12% GST rate.

Importantly, the new regulation doesn’t apply to private, unregistered sellers. Furthermore, no reverse charge liability has been introduced. While most businesses cannot claim input tax credit (ITC) on car purchases, dealers and transporters can. However, businesses eligible for ITC will pay GST on the sale value, not the margin, according to chartered accountant Bimal Jain of A2Z Taxcorp LLP. Only those ineligible for ITC will pay GST on the margin. No GST is payable if a loss is incurred on the sale. Used car dealers not claiming ITC can utilize a margin scheme, paying GST only on the profit margin. Losses cannot be offset against other sales.

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