Before the presentation of the Budget 2018, several key points were discussed in the meeting of the GST Council that took place on 18th January. In the meeting, the tax rates of used cars have been revised. Starting 25th January, pre-owned small and large cars will be taxed at 12 percent and 18 percent respectively. The current tax rates for such vehicles stand at 28 percent and this includes cess as well. SIAM (Society of Indian Automobile Manufacturers) had earlier urged the Government to slash the GST rates and said that the move will surely revive the sale of used cars in India. In July last year, the sale of used cars in India declined due to the increase in GST rates. Also, used car dealers in most of the states in India had to pay higher tax in comparison to the older VAT structure. It is not just automobile on which the tax rates have been reduced. The meeting of the GST council slashed the tax rates on as many as 29 items. Besides used cars, the GST council also slashed the tax rates on public transport buses that source energy from the green fuel.
The new GST rates will not be applicable in case an individual sells his car to another individual or a dealer. Instead, a used car dealer who sells a car to an individual will have to pay the GST and it is applicable to the margin amount. GST or Goods & Service Tax was introduced in India in April 2017 and its main aim was to simplify the tax structure. Under the GST, vehicles were put in the highest slab and the luxury cars attracted an additional cess apart from the GST rate.
The said move by the GST council can indeed ramp up the sale of used cars in the country. Now, only time will tell how much growth does the pre-owned car space sees with the revision in the tax rate.
