GST Rates on Cars in India
Introduction
- The Goods and Services Tax (GST) has significantly transformed the taxation landscape in India, including the automobile sector. The implementation of GST has streamlined the tax structure, replacing multiple indirect taxes with a single unified tax system. This article delves into the GST rates on vehicles, the impact on the automobile industry, and the specific rates applicable to cars and bikes.
GST Rates on Cars
GST on cars in India varies based on several factors such as engine capacity, fuel type, and vehicle category. Here's a breakdown of the GST rates on different types of cars:
- Small Cars: Cars with an engine capacity of less than 1200cc, such as the Volkswagen Polo, Hyundai Grand i10, and Maruti Suzuki Swift, attract a GST rate of 18%.
- Medium-Sized Cars: Cars with an engine capacity between 1200cc and 1500cc, like the Honda Amaze and Nissan Kicks, are also taxed at 18%.
- Luxury Cars: High-end luxury cars with an engine capacity above 1500cc, including models like the Lamborghini Aventador and Toyota Land Cruiser, attract a GST rate of 28%.
- SUVs: Sports Utility Vehicles (SUVs) with an engine capacity above 1500cc, such as the Renault Duster and Mahindra TUV, are also subject to a 28% GST rate.
- Electric Vehicles: To promote eco-friendly transportation, electric vehicles attract a lower GST rate of 12%.
Impact of GST on the Automobile Industry
- The introduction of GST has had a significant impact on the automobile industry in India. Prior to GST, consumers had to pay both excise duty and VAT, which often resulted in a combined tax rate ranging between 26.5% and 44%. With the implementation of GST, the tax rates have been streamlined, reducing the overall tax burden on consumers. The new tax rates range between 18% and 28%, depending on the vehicle category.
GST Rates on Bikes
Similar to cars, the GST rates on bikes also vary based on engine capacity:
- Two-Wheelers up to 350cc: Bikes with an engine capacity of up to 350cc attract a GST rate of 28%.
- Two-wheelers above 350cc: Bikes with an engine capacity above 350cc are subject to a GST rate of 31%, which includes a 3% cess.
GST Compensation Cess on Cars
Here's the table summarizing the GST and Compensation Cess on different types of vehicles in India:
| Type of Vehicle | GST Rate | Compensation Cess | Total Tax Payable |
|---|---|---|---|
| Petrol/CNG/LPG car less than 1200cc and length less than 4 meters | 28% | 1% | 29% |
| Petrol/CNG/LPG car less than 1200cc and length more than 4 meters | 28% | 15% | 43% |
| Petrol/CNG/LPG car over 1200cc (irrespective of length) | 28% | 22% | 50% |
| Diesel car less than 1500cc and length less than 4 meters | 28% | 3% | 31% |
| Diesel car less than 1500cc and length more than 4 meters | 28% | 20% | 48% |
| Diesel car over 1500cc engine capacity, greater than 4 meters length and ground clearance of 170mm or more | 28% | 22% | 50% |
| Electric Cars (all sizes including 2 and 3 wheelers) | 12% | Nil | 12% |
| Vehicles fitted for use as an ambulance | 28% | Nil | 28% |
| Three wheeler motorized vehicles | 28% | Nil | 28% |
| Fuel Cell Vehicles including hydrogen fuel cell vehicles | 12% | Nil | 12% |
| Motorcycles/mopeds with engine capacity of up to 350cc | 28% | Nil | 28% |
| Motorcycles with engine capacity greater than 350cc | 28% | 3% | 31% |
GST on Used Cars
- The Goods and Services Tax (GST) implementation brought significant changes to the taxation of used cars in India. Initially, used cars were taxed at the same rate as new cars, but the rates were subsequently revised to boost the pre-owned car market. This article explores the current GST rates, compensation cess, and the impact of these changes on the used car market.
Current GST Rates on Used Cars
- Smaller Pre-Owned Vehicles:
- Petrol Cars with Engine Capacity up to 1200cc: 12% GST
- Diesel Cars with Engine Capacity up to 1500cc: 12% GST
- Larger Pre-Owned Vehicles:
- Petrol Cars with Engine Capacity exceeding 1200cc: 18% GST
- Diesel Cars with Engine Capacity exceeding 1500cc: 18% GST
Here's the table summarizing the GST rates and compensation cess for used cars in India:
| Type of Used Car | GST Rate | Compensation Cess | Total Tax Payable |
|---|---|---|---|
| Petrol cars up to 1200cc engine capacity | 12% | Nil | 12% |
| Diesel cars up to 1500cc engine capacity | 12% | Nil | 12% |
| Petrol cars with engine capacity exceeding 1200cc | 18% | Nil | 18% |
| Diesel cars with engine capacity exceeding 1500cc | 18% | Nil | 18% |
GST on Commercial Vehicles
GST on commercial vehicles in India varies based on the type and use of the vehicle. Here's a detailed overview of the GST rates for different categories of commercial vehicles:
| Type of Commercial Vehicle | GST Rate | Compensation Cess | Total Tax Payable |
|---|---|---|---|
| Passenger-carrying vehicles (e.g., buses) | 28% | 1% | 29% |
| Goods-carrying vehicles (e.g., trucks, tempos) | 28% | 1% | 29% |
| Agricultural tractors | 12% | Nil | 12% |
| Special purpose vehicles (e.g., ambulances) | 28% | Nil | 28% |
| Electric Commercial Vehicles | 12% | Nil | 12% |
| Fuel Cell Vehicles including hydrogen fuel cell vehicles | 12% | Nil | 12% |
The GST rates on commercial vehicles are designed to streamline the tax structure and promote the growth of the automobile sector. By consolidating multiple indirect taxes into a single tax system, GST has reduced the overall tax burden on consumers and businesses alike.
Conclusion
- The GST regime has brought about a more transparent and simplified tax structure for the automobile industry in India. By consolidating multiple indirect taxes into a single tax system, GST has reduced the overall tax burden on consumers and promoted the growth of the automobile sector.
FAQs:
How much is GST on vehicles?
28%
| Vehicle Category | GST Rate |
|---|---|
| Passenger Cars | 28% |
| Two-Wheelers | 28% for engine capacity less than 350cc, 31% for engine capacity more than 350cc |
| Electric Vehicles (EVs) | 5% |
| Commercial Vehicles | Ranges from 12% to 28% |
How to calculate GST on a vehicle
To calculate the total tax on cars:
- Formula:
Total Tax = Ex-showroom Price × (GST Rate + Cess Rate)
Example:
- Ex-showroom Price of a diesel small car (under 1500cc): Rs. 6,00,000
- GST Rate: 28%
- Cess Rate: 3%
- Total Tax = Rs. 6,00,000 × 31% = Rs. 1,86,000
- Final Price = Rs. 6,00,000 + Rs. 1,86,000 = Rs. 7,86,000
How do I claim the GST input amount?
- To claim GST input, ensure your business is GST-registered, maintain records of business-related expenses, and report them accurately on your GST return.
Can we claim GST on commercial vehicles?
- Yes, businesses can claim GST on a commercial vehicle if used for business purposes. Maintain proper records, be GST-registered, and follow tax regulations to qualify for input tax credits.
What is the GST rate for commercial cars?
- The GST rate on commercial vehicles ranges from 12% to 28%. The specific rate depends on the type of vehicle and its engine capacity. For example, the GST rate on petrol cars with an engine capacity up to 1200cc is 12%, while the GST rate on electric vehicles is 5%.
Is there GST on cars below 10 lakhs?
- Yes, there is GST on cars below ₹10 lakhs. The GST rate for small cars, typically with engine capacity up to 1200cc and priced below ₹10 lakhs, is 12%. This lower rate is part of the government's initiative to make smaller cars more affordable.
What is the GST rate for 2 vehicle?
The GST rate for two-wheelers in India depends on the engine capacity:
- Two-wheelers with engine capacity less than 350cc: 28% GST
- Two-wheelers with engine capacity more than 350cc: 31% GST (28% + 3% cess)
- Electric two-wheelers attract a lower GST rate of 5% to promote eco-friendly transportation.
We hope that you like this content and for more such content Please follow us on our social site and YouTube and subscribe to our website.
Manage your business cash flows and payable/receivables using our Bahi Khata App.
Comments ()