No GST for Used Cars Sold By Individuals

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Revenue Department has cleared that used vehicles sold by unregistered supplier or individuals won’t be taxed under GST

While the brand new automobiles are being taxed with GST in the new system implemented across the country from 1st July 2017, used vehicles sold by individuals or unregistered suppliers won’t be taxed. The Revenue Department has cleared this and thanks to this tax waiver on the used vehicles, it is expected that the pre-owned car market of the country will see a boost.

Currently, in India several automakers sell pre-owned cars through their dedicated used car selling platforms. Apart from that a large number of used vehicles are marketed by unregistered local suppliers and individuals as well. Under the new tax system, these local unregistered operators and individual sellers would play major role in the pre-owned car market.

Also read: Used Car Market Operators Focusing on Electric and Hybrid Models

India is one of the biggest cars markets in the world and it is growing fast. Alongside the new cars, used vehicle market is also booming for last couple of years. Speaking about the new cars, the prices of the vehicles have become cheaper after the implementation of the new tax structure. Smaller cars have received marginal price cuts, while the big SUVs, luxury vehicles have received major price slash.

The two-wheelers too have received price reduction thanks to GST. Two-wheelers with sub-350 cc engines have become cheaper by 2%-3% as under GST they are taxed at 28% compared to pre-GST era’s 30% tax rate. On the other hand, the motorcycles with engines displacing more than 350 cc are drawing 31% tax under the new system, which includes 3% cess over and above the 28% GST.

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Also read: Upcoming Cars in India Between Rs. 5-8 Lakh

GST has been the biggest tax reform in the country after 1947. It has merged several central, state and local body taxes into one package and rolled out an uniform structure that has simplified the tax system. While the conventional fuel powered cars have become cheaper than before, the hybrid vehicles have become pricier under GST as they draw 15% cess over and above the 28% GST.