Although it sparked criticism, the GST Council has approved an 18% tax on used EVs sold by businesses. Individual sales remain GST-free, while insurance tax changes are postponed.
The Goods and Services Tax (GST) Council, led by Union Finance Minister Nirmala Sitharaman, has clarified that the revised tax rate on used electric vehicles (EVs) will apply only to sales made by businesses, not individual sellers.
At its 55th meeting, held on Saturday, the Council approved an 18% GST on the margin value (the difference between the purchase and selling price, or the depreciated value if depreciation has been claimed) for used EVs sold by businesses. This change aligns the tax rate for electric vehicles with that of non-electrically used vehicles. Sales between individuals of used EVs will remain exempt from GST, as previously.
However, the decision has sparked criticism from opposition leaders. Aam Aadmi Party leader Arvind Kejriwal accused the central government of favouring the wealthy, claiming that the increased tax burden on old cars would hurt the middle class.
Similarly, Samajwadi Party leader Akhilesh Yadav criticised the government’s frequent changes to GST rates, calling it a ‘game of snakes and ladders’ that creates confusion for honest businesses while benefiting corrupt elements.
Currently, used vehicles, including EVs, are taxed at 12% GST, with some exceptions for larger petrol and diesel cars. The new 18% rate applies only to business transactions, ensuring that individual sales remain unaffected.
The Council postponed decisions on lowering insurance product taxes and imposing GST on food delivery services from app-based platforms.
