GST hike on used car sales to impact affordability: Cars24 CEO

Policies that impact affordability, like the recent GST (Goods and Services Tax) hike, can unintentionally slow down car ownership in India, according to Cars24’s Vikram Chopra.

Used cars are the backbone of mobility for millions of Indians, especially in Tier 2 and 3 cities and rural areas, where they serve as an affordable way to achieve the dream of car ownership, the co-founder and CEO of India’s largest used car platform says in a post on LinkedIn.

“Rather than focusing on taxation alone, we urge the government to look at the bigger picture. Used cars don’t just help individuals—they fuel economic growth by supporting thousands of small businesses, from dealers to service providers, and contribute to a circular economy by extending the lifecycle of vehicles,” says Chopra.

The Cars24 founder says the focus should be on making used cars a safer, greener, and more reliable option for consumers, not just taxing them further. “For example, we need clear policies and stronger implementation around responsibly dismantling end-of-life vehicles and incentivizing sustainable practices in the automobile sector,” he says.

If India wants to develop a thriving economy, the country needs to work together to ensure mobility remains accessible and affordable, says Chopra.

The GST Council’s decision to hike GST on the sale of old and used vehicles from 12% to 18% for businesses is expected to adversely impact the growth of trade through formal and online channels. The move will be applicable only on businesses who claim depreciation on vehicles and not individuals.

“GST is applicable only on the value that represents margin of the supplier, that is, the difference between the purchase price and selling price (depreciated value if depreciation is claimed) and not on the value of the vehicle,” the ministry of finance said on Saturday.

The move has received flak from several social media users. “Car is a fixed asset, it depreciates. If you sell a used car either you make profit or loss. Hence it should be subject LTCG/STCG tax only if you make profit. How is selling a used car misconstrued as selling a service?” says Muthoot Microfin CEO Sadaf Saeed in a post on X.

“When VAT (value added tax) was replaced by GST , Goods tax was applicable in manufacturing value chain. How can end user be considered as a person adding value by using the goods.  GST on used car sale is illogical,” he adds.

Saeed believes excessive taxation is counter-productive. By taxing more you kill consumption and low consumption leads to low manufacturing which results in fewer jobs, he says. High taxes leave little in hands to invest and as there is no private capex, the onus for growth and employment shifts back to government, he says.

“Managing the right balance of taxes needed for govt functioning and public good and leaving sufficient in hands of people to boost consumption and encourage investment is an art of intelligent economics. Not easy, but surely doable,” he says.