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Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Trusted by 1L+ Indians
Want to Achieve any of the below Goals upto 80% faster?
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Trusted by 3 Crore+ Indians
Want to Achieve any of the below
Goals upto 80% faster?
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Trusted by 3 Crore+ Indians
Want to Achieve any of the below
Goals upto 80% faster?
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Trusted by 3 Crore+ Indians
Want to Achieve any of the below Goals upto 80% faster?
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Trusted by 3 Crore+ Indians
Want to Achieve any of the below Goals upto 80% faster?
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
GST on Cars in India
GST on Cars in India
Introduction
In India, the Goods and Services Tax (GST) system, implemented to streamline and simplify the taxation process, applies to a wide range of goods and services, including motor vehicles. The GST framework in India categorizes vehicles into different slab rates, influencing the overall tax burden on cars. This comprehensive guide delves into the GST rates applicable to various types of cars, compensation cess, and recent updates impacting vehicle taxation.
GST Rates on Cars
The GST system in India classifies motor vehicles under various slab rates, including 5%, 12%, 18%, and 28%. The most pertinent rate for most cars, whether for personal or commercial use, is 28%. However, the tax burden on cars can extend beyond just the GST rate due to the addition of compensation cess.
1. GST on Cars for Personal Use
For personal use, motor vehicles and their parts are subjected to GST rates that vary based on the type and specifications of the vehicle. The GST slab rates applicable are:
5% GST: This rate is applicable to carriages specifically designed for disabled persons and their related accessories. This lower rate was introduced to support accessibility and was formalized during the 31st GST Council Meeting in December 2018.
12% GST: This rate applies to vehicles driven by electric motors, including two-wheelers and three-wheelers, as well as those powered by fuel cells such as hydrogen fuel cells. Additionally, non-motorized vehicles like bicycles and certain hand-propelled vehicles also fall under this category.
18% GST: This rate is applicable to specific categories like cars designed for physically handicapped individuals (under specific conditions), baby carriages, and their replacement parts.
28% GST: This is the standard rate for most motor vehicles, including petrol or diesel cars used for transporting people, motorcycles, and mopeds. The 28% rate also applies to vehicle parts and accessories. However, the actual tax burden may be higher due to compensation cess.
2. Compensation Cess on Cars
The compensation cess is an additional charge levied on top of the GST to compensate for potential revenue losses experienced by manufacturing states under the GST regime compared to the previous VAT system. This cess applies to various goods, including motor vehicles, and can significantly impact the overall tax rate on cars.
Here’s a breakdown of how compensation cess affects different types of vehicles:
Petrol/CNG/LPG Cars:
Less than 1200cc and less than 4 meters in length: 28% GST + 1% Compensation Cess = 29%
Less than 1200cc and more than 4 meters in length: 28% GST + 15% Compensation Cess = 43%
Over 1200cc: 28% GST + 22% Compensation Cess = 50%
Diesel Cars:
Less than 1500cc and less than 4 meters in length: 28% GST + 3% Compensation Cess = 31%
Less than 1500cc and more than 4 meters in length: 28% GST + 20% Compensation Cess = 48%
Over 1500cc with certain specifications: 28% GST + 22% Compensation Cess = 50%
Electric Cars and Fuel Cell Vehicles:
All sizes including two and three-wheelers: 12% GST + Nil Compensation Cess = 12%
Ambulances and Three-Wheeler Motorized Vehicles:
Applicable Rate: 28% GST + Nil Compensation Cess = 28%
The compensation cess rates are based on factors like engine capacity, vehicle length, and usage, leading to a broad spectrum of tax liabilities for different types of vehicles.
3. GST on Commercial Vehicles
Commercial vehicles, designed for carrying passengers, goods, or for agricultural purposes, attract GST rates between 12% and 28%, depending on their use and specifications:
12% GST: Applied to agricultural tractors (excluding road tractors) and self-loading/unloading trailers for agricultural purposes.
18% GST: Applies to buses running on bio-fuels, refrigerated motor vehicles, and special-purpose vehicles such as crane lorries and concrete-mixer lorries.
28% GST: For road tractors exceeding 1800cc engine capacity, vehicles transporting 10 or more people (excluding bio-fuel buses), and motor vehicles used for goods transport (excluding refrigerated vehicles).
In addition to GST, a compensation cess of 15% applies to commercial vehicles designed to transport up to 13 people, including the driver.
4. GST on Used Cars
The GST rates for used cars were initially aligned with those for new vehicles. However, to boost the used car market, the rates have been revised:
12% GST: Applied to used petrol cars with engine capacity up to 1200cc and used diesel cars with engine capacity up to 1500cc.
18% GST: Applicable to used petrol cars with engine capacity exceeding 1200cc and used diesel cars with engine capacity exceeding 1500cc.
The most significant change in the taxation of used cars is the revision of the compensation cess. Since January 25, 2018, the compensation cess for used cars has been reduced to nil, provided no input tax credit has been claimed. This change aims to make used car purchases more affordable.
5. GST Rate on Electric Vehicles
The GST rate on electric vehicles (EVs) and their accessories was reduced to 5% during the 36th GST Council meeting held on July 27, 2019. This rate applies to all EVs, irrespective of whether they are for personal or commercial use. The reduced GST rate is part of the government’s initiative to promote the adoption of clean energy vehicles.
Conclusion
The GST on cars in India is a multi-faceted topic involving various rates and additional cess charges that significantly impact the final tax burden. Understanding these rates helps consumers and businesses make informed decisions regarding vehicle purchases and planning. With ongoing updates and revisions in GST rates and cess, it’s crucial to stay updated with the latest information from the GST Council to ensure compliance and optimize tax liabilities.
For those seeking more details, tools like Paisabazaar’s GST Rate Finder and HSN/SAC Code Finder can provide up-to-date and comprehensive information tailored to specific vehicle types and their corresponding GST rates.
Introduction
In India, the Goods and Services Tax (GST) system, implemented to streamline and simplify the taxation process, applies to a wide range of goods and services, including motor vehicles. The GST framework in India categorizes vehicles into different slab rates, influencing the overall tax burden on cars. This comprehensive guide delves into the GST rates applicable to various types of cars, compensation cess, and recent updates impacting vehicle taxation.
GST Rates on Cars
The GST system in India classifies motor vehicles under various slab rates, including 5%, 12%, 18%, and 28%. The most pertinent rate for most cars, whether for personal or commercial use, is 28%. However, the tax burden on cars can extend beyond just the GST rate due to the addition of compensation cess.
1. GST on Cars for Personal Use
For personal use, motor vehicles and their parts are subjected to GST rates that vary based on the type and specifications of the vehicle. The GST slab rates applicable are:
5% GST: This rate is applicable to carriages specifically designed for disabled persons and their related accessories. This lower rate was introduced to support accessibility and was formalized during the 31st GST Council Meeting in December 2018.
12% GST: This rate applies to vehicles driven by electric motors, including two-wheelers and three-wheelers, as well as those powered by fuel cells such as hydrogen fuel cells. Additionally, non-motorized vehicles like bicycles and certain hand-propelled vehicles also fall under this category.
18% GST: This rate is applicable to specific categories like cars designed for physically handicapped individuals (under specific conditions), baby carriages, and their replacement parts.
28% GST: This is the standard rate for most motor vehicles, including petrol or diesel cars used for transporting people, motorcycles, and mopeds. The 28% rate also applies to vehicle parts and accessories. However, the actual tax burden may be higher due to compensation cess.
2. Compensation Cess on Cars
The compensation cess is an additional charge levied on top of the GST to compensate for potential revenue losses experienced by manufacturing states under the GST regime compared to the previous VAT system. This cess applies to various goods, including motor vehicles, and can significantly impact the overall tax rate on cars.
Here’s a breakdown of how compensation cess affects different types of vehicles:
Petrol/CNG/LPG Cars:
Less than 1200cc and less than 4 meters in length: 28% GST + 1% Compensation Cess = 29%
Less than 1200cc and more than 4 meters in length: 28% GST + 15% Compensation Cess = 43%
Over 1200cc: 28% GST + 22% Compensation Cess = 50%
Diesel Cars:
Less than 1500cc and less than 4 meters in length: 28% GST + 3% Compensation Cess = 31%
Less than 1500cc and more than 4 meters in length: 28% GST + 20% Compensation Cess = 48%
Over 1500cc with certain specifications: 28% GST + 22% Compensation Cess = 50%
Electric Cars and Fuel Cell Vehicles:
All sizes including two and three-wheelers: 12% GST + Nil Compensation Cess = 12%
Ambulances and Three-Wheeler Motorized Vehicles:
Applicable Rate: 28% GST + Nil Compensation Cess = 28%
The compensation cess rates are based on factors like engine capacity, vehicle length, and usage, leading to a broad spectrum of tax liabilities for different types of vehicles.
3. GST on Commercial Vehicles
Commercial vehicles, designed for carrying passengers, goods, or for agricultural purposes, attract GST rates between 12% and 28%, depending on their use and specifications:
12% GST: Applied to agricultural tractors (excluding road tractors) and self-loading/unloading trailers for agricultural purposes.
18% GST: Applies to buses running on bio-fuels, refrigerated motor vehicles, and special-purpose vehicles such as crane lorries and concrete-mixer lorries.
28% GST: For road tractors exceeding 1800cc engine capacity, vehicles transporting 10 or more people (excluding bio-fuel buses), and motor vehicles used for goods transport (excluding refrigerated vehicles).
In addition to GST, a compensation cess of 15% applies to commercial vehicles designed to transport up to 13 people, including the driver.
4. GST on Used Cars
The GST rates for used cars were initially aligned with those for new vehicles. However, to boost the used car market, the rates have been revised:
12% GST: Applied to used petrol cars with engine capacity up to 1200cc and used diesel cars with engine capacity up to 1500cc.
18% GST: Applicable to used petrol cars with engine capacity exceeding 1200cc and used diesel cars with engine capacity exceeding 1500cc.
The most significant change in the taxation of used cars is the revision of the compensation cess. Since January 25, 2018, the compensation cess for used cars has been reduced to nil, provided no input tax credit has been claimed. This change aims to make used car purchases more affordable.
5. GST Rate on Electric Vehicles
The GST rate on electric vehicles (EVs) and their accessories was reduced to 5% during the 36th GST Council meeting held on July 27, 2019. This rate applies to all EVs, irrespective of whether they are for personal or commercial use. The reduced GST rate is part of the government’s initiative to promote the adoption of clean energy vehicles.
Conclusion
The GST on cars in India is a multi-faceted topic involving various rates and additional cess charges that significantly impact the final tax burden. Understanding these rates helps consumers and businesses make informed decisions regarding vehicle purchases and planning. With ongoing updates and revisions in GST rates and cess, it’s crucial to stay updated with the latest information from the GST Council to ensure compliance and optimize tax liabilities.
For those seeking more details, tools like Paisabazaar’s GST Rate Finder and HSN/SAC Code Finder can provide up-to-date and comprehensive information tailored to specific vehicle types and their corresponding GST rates.
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