In order to make used cars more affordable, the GST Council announced a reduction in the tax rate on Old used vehicle transactions in its meeting held on January 18, 2017. The tax rate on used old car transactions has been reduced to 18 percent for large cars and SUVs, and 12 percent for small vehicles, from 28 percent (for both categories) earlier. The new rates have come into effect from January 25, 2018.
Government has issued Notification No. 8/2018 Central Tax Rate read with State Tax Rate Notification & Notification No. 1/2018 Compensation Cess Rate reduced the Rate of GST & exempted the Cess on old and used vehicle as follows:
| Sr. No. | Particulars | HSN | Engine Capacity | Length | Intrastate | Interstate | Cess (Rate) | ||
| CGST | SGST | Total | IGST | ||||||
| 1 | Petrol Liquefied petroleum gases (LPG) or compressed natural gas (CNG)driven motor vehicles | 8703
|
> 1200 CC | > 4000 mm | 9% | 9% | 18% | 18% | NIL |
| 2 | Dieseldriven motor vehicles | 8703 | > 1500 CC | > 4000 mm | 9% | 9% | 18% | 18% | NIL |
| 3 | Sports Utility Vehicles (SUVs)including utility vehicles | 8703
|
> 1500 CC | 9% | 9% | 18% | 18% | NIL | |
| 4 | All Old and used Vehicles other than those mentioned from S. No. 1 to S.No.3 | 87 Others | 6% | 6% | 12% | 12% | |||
Valuation of for the purpose of charging GST on supply of such goods will be as follows:
| Sr. No. | Particulars | Margins * | |
| 1 | in case of a registered person who has claimed depreciation under section 32 of the Income-Tax Act,1961(43 of 1961) on the said goods | Consideration Received (-) Depreciated Value (WDV) | # # |
| 2 | In any other case | Selling Price (-) Purchase Price | # # |
* Margin for this purpose means that Value on which GST should be charged
## If the difference is positive then charge GST on that Positive difference i.e Margin Amount
## If the difference is Negative then GST shall be ignored
This notification shall not apply, if the supplier of such goods has availed input tax credit as defined in clause (63) of section 2 of the Central Goods and Services Tax Act, 2017, CENVAT as defined in CENVAT Credit Rules, 2004 or the input tax credit of Value Added Tax or any other taxes paid, on such goods.