Used Small Cars, EVs To Get More Expensive? GST Council Reportedly Mulling Rate Hike

The prices of second-sale electric cars, subcompact sedans, SUVs, and hatchbacks could hike in coming weeks. According to reports, the GST Council is set to consider a GST rate standardisation for the used car market, which could make small cars and EVs more expensive.

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Presently the market is taxed under two slabs - 12 per cent for EVs and internal combustion models measuring under 4m and featuring petrol engines under 1200 cc and diesel engines under 1500 cc, and 18 per cent for all other models.

Currently second-sale EVs and subcompact cars fall under the 12 per cent GST rate slab.

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As per reports, the GST Council’s Fitment Committee has recommended standardising this rate to 18 per cent for all categories of vehicles. This would make used EVs and subcompact internal combustion models pricier than before. Do note that GST is applied only on sales of used cars in the hands of dealers and not on sale of car by a private individual. The rate is applicable on the margin earned by dealers on such sales - purchase price minus the final sales price.

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The GST Council is set to convene on December 20 and 21 where the proposed rate change is reportedly to be tabled for consideration.

Representational images.