GST on second hand vehicles for businesses hiked from 12% to 18%

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The council also decided to reduce the GST rate on fortified rice kernel to 5% and exempt GST on gene therapy
GST on second hand vehicles for businesses hiked from 12% to 18%
GST is applicable only on the value that represents the margin of the supplier Credits: Getty Images

Buying a second hand vehicle will now become expensive. As a part of a slew GST rate tweaks announced by the GST Council today, the rate on the sale of old and used vehicles has been increased from 12% to 18%. The move will be applicable only on businesses that claim depreciation on vehicles and not individuals.

“The GST council today decided to increase the GST rate from 12% to 18% on the sale of all old and used vehicles, including EVs, other than those specified at 18% - old and used petrol vehicles of engine capacity of 1200 cc or more and a length of 4000 mm or more; diesel vehicles of engine capacity of 1500 cc or more and a length of 4000 mm and SUVs,” said the ministry of finance.

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“GST is applicable only on the value that represents the 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. Also, it is not applicable in case of unregistered persons,” the ministry clarified.

The council also decided to reduce the GST rate on fortified rice kernel to 5% and exempt GST on gene therapy, which is a critical treatment for life-saving diseases.

The council also decided to extend the IGST exemption to systems, sub-systems, equipment, parts, sub-parts, tools, test equipment, software meant for the assembly/manufacture of LRSAM system. The council also decided to reduce the rate of compensation cess to 0.1% on supplies to merchant exporters, at par with GST rate on such supplies.

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