Change in rate on Sale of all old and used vehicles including electric vehicles (EVs) except categories which already taxed at 18% – Notification No. 04/2025 – Central Tax (Rate)
The CBIC, has issued an amendment to the Notification No. 8/2018-Central Tax (Rate) i.e. Notification No. 04/2025 which aims to increase the GST rate from 12% to 18% on sale of all old and used vehicles, including EVs, except for the vehicles that are already taxed @18%.
This is to provide a uniform tax rate of 18% which were previously taxed at 12%, including old EVs, when resold by businesses.
This Notification shall have an immediate effect i.e. 16.01.2025.
It is a margin based taxation mechanism. The GST is applied to the margin value, not the total value of the vehicle, defined as:
- Margin Value = Selling Price – Purchase Price (depreciated value if depreciation is claimed).
This ensures that GST is not levied on the full value of the vehicle, minimizing the tax burden on end consumers.
The similar Notifications have been issued under Union Territory Tax (Rate) and Integrated Tax (Rate) vide Notification No. 04/2025- Union Territory Tax (Rate) and Notification No. 04/2025- Integrated Tax (Rate) respectively.
Exclusions from Applicability
GST on the sale of old and used vehicles is not applicable in the following cases:
- Transactions by unregistered persons.
- Specific vehicle categories already taxed at 18%:
- Old petrol vehicles with engine capacity 1200 cc or more and length 4000 mm or more.
- Old diesel vehicles with engine capacity 1500 cc or more and length 4000 mm or more.
- SUVs meeting prescribed criteria.
(Disclaimer: This information is meant primarily for general informative purposes and is based on legally sourced web sources. The content is not a replacement for expert legal counsel, even if every effort has been made to assure its correctness and legitimacy. For guidance on particular circumstances, the user is advised to speak with a trained legal expert or other appropriate authorities. Neither the author nor the publisher guarantee that this material is applicable to specific situations, nor do they assume any liability for any loss or damage resulting from its use.)
Useful Links
https://gstcouncil.gov.in/sites/default/files/2025-01/ctr04-2025.pdf
https://gstcouncil.gov.in/sites/default/files/2024-05/download_92.pdf
Adv. Arushi Arora
B.Com, LL.B, LL.M