4,80,000 people visited this section in last 30 days. Apply Online

Get Cashback of Upto ₹ 1,000* on Loans Apply Online

MyLoanCare Customer Ratings - 4.5/5.0 Apply Online

GST on Cars

GST Rates on Cars

Last Updated 13th Jun 2021

  • The GST charges on cars ranges between 5% to 28%.
  • GST on cars varies based on the type of car and its use.
  • The lowest GST applicable is 5% which is for the carriages of physically disabled individuals and on electric vehicles.
  • The compensation cess is applicable under the GST Act to compensate for any losses of revenue of the manufacturing state.
  • The compensation cess depends on the car type, length and engine capacity.
Exclusive Offer to Open FREE Demat
Account for MyLoanCare Customers
  • Open account online in 5 minutes from 5paisa.com
  • Get ₹ 200 credit in your account for trading
Click Here To Apply

GST Impact on Cars

The automobile industry is the most flourishing sector in the country. India gains a net manufacturing GDP of 49% and 27% in the form of industrial GDP. Besides, more than 37 million people are employed in the automobile industry, thereby making it the largest job hub for Indians. Hence, around 15% of the net GST of the country is allocated to the automobile industry. Additionally, the execution of the GST on cars has been proved to be beneficial for quite a few sectors. The current GST rates for cars are 28%, 18%, 12% and 5%. Consumers, dealers and manufacturers have been heavily benefitted by the GST impact on cars.

GST impact on cars for each section is as follows.
  • Consumers: Compared to the previous rates of taxation, the gross rate of tax imposed on cars currently is comparatively less. Nnow, consumers are paying a lower amount of tax than he used to pay before GST was introduced.
  • Importers or dealers: The introduction of GST has been of benefit for dealers and importers as now they can make a claim of the paid tax. Previously, the excise duty and VAT were not applicable for claiming a tax.
  • Manufacturers: The GST on cars was introduced in lieu of all the taxes that were present before. Now manufacturers have to pay just one tax which is significantly lesser than the erstwhile tax rates. Hence manufacturers of cars have greatly benefited from the new taxation system, GST.

GST on Cars for Personal Use

Vehicles such as motor vehicles, cars and bicycles which are utilised for personal needs are also applicable for GST. This GST on vehicles ranges between 5% to 12%. Moreover, the GST is applied to both the vehicle and its replacement parts and accessories.

  • 5% GST on vehicles: The GST on vehicles and cars is 5% under the given circumstances.
    • Vehicles used by disabled individuals.
    • The accessories and parts of these carriages used by disabled individuals.
  • 12 % GST on vehicles: The GST on vehicles and cars is 12% under the given circumstances.
    • Vehicles that run on electric motors.
    • Vehicles that run on fuel cell and hydrogen fuel cell technology.
    • Non-motor bicycles including delivery tricycles and bicycles along with their accessories and parts.
    • Vehicles that are driven by the hand such as hand carts, rickshaws and vehicles drawn by animals.
  • 18% GST on vehicles: The car GST rate and GST on other vehicles is 18% under the given circumstances.
    • Cars used by handicapped individuals based on certain conditions.
    • Perambulators along with their replacement pieces.
  • 28% GST on vehicles:The car GST rate and GST on other vehicles is 28% under the given circumstances.
    • Automobiles that run on petrol and diesel, and are used for the purpose of transportation of individuals inclusive of station wagons and racing vehicles notwithstanding the size of the vehicles.
    • Mopeds and motorbikes irrespective of side carriers.
    • Accessories of spare parts of mopeds and motorcycles and their side carriers.

The GST Audi, Bugatti, Land Rover and other luxury car users pay are on a much higher scale. The percentage can go as high as 42%.

Compensation Cess on GST Act6

The Compensation Cess is a regulation under the GST Act, which is a kind of tariff applicable on a few goods together with the GST. During the time of the VAT system, the producer states used to collect the taxes if there were any transfer of interstate services and goods. However, with the introduction of the Compensation Cess, manufacturing states are compensated for any possible loss that might be incurred during the GST taxation system. Currently, the compensation Cess imposed on several basic includes the following.

  • Automobiles
  • Aerated water
  • Different kinds of solid fuels ovoids, briquettes, coal and its derivatives.
  • Tobacco and its byproducts, such as cigarettes.

As per the regulations of the GST Act, for goods that are exported to different countries from our country, the compensation cess cannot be applied. Moreover, if the exporter pays any compensation cess, it will be returned. Apart from that, if any business or individual has registered for the composition scheme, the compensation cess is not applicable to them. The provision of the compensation cess was implemented on 1st July 2017 and will remain in force till 1st July 2022.

GST Compensation Cess on Cars

During the time of sale of vehicles along with GST, a compensation cess applies to the car as well. Read the table below to find out about the GST rate on cars along with the compensation cess that is applicable to these private cars.

Type of vehicle Rate of GST Compensation Cess Gross tax payable
Cars using LPG, CNG or petrol below 1200cc and below the length of 4m. 28% 1% 29%
Cars using LPG, CNG or petrol below 1200cc and above the length of 4m. 28% 15% 43%
Cars using LPG, CNG or petrol above 1200cc, notwithstanding the length. 28% 22% 50%
Cars that run on diesel, below 1500cc and 4m length. 28% 3% 31%
Cars that run on diesel, below 1500cc and above 4m length. 28% 20% 48%
Cars that run on diesel above 1500cc and 4m length and has a 170mm or above ground clearance. 28% 22% 50%
Electric cars, both 3 and 2 wheelers irrespective of the size. 12% N.A 12%
Vehicles used as an ambulance. 28% N.A 28%
Motor vehicles of three vehicles. 28% N.A 28%
Automobiles made of fuel cells. 12% N.A 12%
Mopeds and motorcycles up to 350cc. 28% N.A 28%
Mopeds and motorcycles above 350cc. 28% 3% 31%

The table makes it clear that the GST rate on cars running on diesel and having a high capacity of the engine is the highest along with the highest rates of compensation cess. Additionally, cars that have small engines having clean technology have low GST rates along with low rates of compensation.

GST on Commercial Vehicle

The GST rate on commercial automobiles such as vehicles for goods, passengers and those used for agricultural purposes, is between 12% to 28.

  • 12% GST on commercial vehicles: The GST on commercial vehicles is 12% under the given circumstances.
    • Self-unloading and loading trailers utilised for agricultural needs.
    • Tractors other than road tractors used for semi-trailers above 1800cc.
  • 18% GST on commercial vehicles: The GST on commercial vehicles is 18% under the given circumstances.
    • Buses that run on biofuels and are used for transportation.
    • Refrigerated automobiles.
    • Automobiles utilised for specialised needs such as concrete mixer lorries, breakdown lorries and crane lorries.
    • Spare parts of tractors such as radiator assembly, clutch assembly, axles, brakes assembly and so on. However, it is not limited to these parts only.
    • Trucks driven by self without having lifting or handling tools utilised for goods transportation within small distances such as warehouses, factories, docks, airports and so on.
  • 28% GST on commercial vehicles: The GST on commercial vehicles and cars used for commercial purposes is 28% under the given circumstances.
    • Road tractors having semi-trailers above 1800cc.
    • Automobiles for the transportation passengers of a minimum capacity of ten people. This does not include public transport buses that run on biofuel.
    • Automobiles for goods transportation. This does not include refrigerated motor vehicles.
    • Accessories and parts of different motor vehicles not including parts of tractors.

15% compensation cess is also applied to commercial vehicles that have a capacity to carry 13 passengers along with the driver, or above and is liable to pay GST.

GST on Used Cars

Formerly, the same GST and compensation cess rates were levied on the new vehicles and used cars. But the rates have been slashed to bolster the market of used cars. Read the table given below to find out about the GST on used cars.

Kind of used car GST on pre-owned car Compensation Cess Net tax payable
Cars propelled by petrol having an engine capacity of 1200 cc. 12% N.A 12%
Cars operating on petrol above 1200cc. 18% N.A 18%
Cars running on diesel within the engine capacity of 1500cc. 12% N.A 12%
Cars running on diesel above the engine capacity of 1500cc. 18% N.A 18%

Although the current GST rates have been reduced from 28%, the greatest benefit was the reduction in the compensation cess. The compensation cess has been made nil since 25th January 2018 for used cars withstanding their size. This is only applicable only if the benefits of the input taxes have not been claimed in place of other taxes or under the CENVAT credit.

GST Rates on Electric Vehicle

The former GST rates on electric vehicles along with their essential accessories were 18%. However, following the 36th Council Meeting of GST of July 2019, this has now been slashed to 5% only, where the same is applicable to the accessories of the EV such as EV charging station and charger. The new rate has been in effect since August 2019 and is applied to both commercial and personal use of electric vehicles.

FAQs

What is the rate of GST on cars?

The GST rate on cars varies on the basis of the type of cars such as cars for personal use, commercial use, used cars and electric cars. However, the GST rate that is applicable to different types ranges from 5% to 28%. Moreover, there can be added compensation cess charges based on the type of car you have.

Is there GST on cars?

Almost every goods and service are applicable for GST charges. This includes automobiles too, which includes cars and bikes, bicycles and other kinds of motor vehicles. Cars have GST rates of 5%, 12%, 18% and 28% depending on the type of car and its use. Thus, GST rates are applicable to cars.

Will GST be reduced on cars?

Given the current economic situation, many car manufacturers have asked the Government to reduce the applicable GST temporarily. However, the government has not given any nod to this. Moreover, the government has asked the car manufacturers to re-examine their royalties to the parent companies and lessen the vehicles’ cost.

What is the GST on luxury cars?

The GST on luxury cars is 28%. This includes GST Audi, Lamborghini, Aventador, Bugatti Chiron, Land Rover etc. Before GST an individual owning a luxury car had to pay a tax as high as 42% including GST Audi which has now been significantly reduced after the introduction of GST.

Does the ex-showroom price of a car include GST?

The ex-showroom price is the one that you see mentioned in advertisements. The ex-showroom price is basically the cost of manufacturing the respective car. This is necessary for you to know that if you are going to buy a car, the ex-showroom price always includes the GST charges along with a share of the dealer’s revenue.


Notification ×
  • Home Loan

    Home Loan at all-time low rates starting at 6.65%. Cashback of up to ₹ 1,000.

    Apply Now
  • Personal Loan

    Instant Personal Loan starting at 10.25% with Cashback of up to ₹ 1,000 .

    Check Offers
  • Gold Loan

    Instant Gold Loan starting at 9.50% with Cashback of up to ₹ 500

    Apply Now
  • Loan Against Property

    Best Loan Against Property Offers starting @ 7.20%. Cashback of up to ₹ 1,000*.

    Apply Now
  • Business Loan

    Collateral Free Business Loan Rates starting at 14.00% with Overdraft facility.

    Apply Now
  • Fixed Deposit

    AAA rated FDs with returns as high as 6.95%.

    Invest Now
Our News - Jun 2021
  • 2021-03-02 : GST crosses Rs. 1.1 lakh cr-mark for third straight month
    GST collections for February crossed Rs. 1.1 lakh crore for the third consecutive month.The gross GST revenue collected in the month of February 2021 is Rs. 1,13,143 crore. The increase in GST collection is an indication of economic recovery of the country post the pandemic.
  • 2021-02-18 : Government tightened GST registration rules
    Government made GST rules stringent. According to the new rules non-compliance will result in the cancellation of a taxpayer’s GST registration. The primary aim of the move is to curtail fraudulent business practices and the wrongful availing of the input tax credit by businesses.
  • 2021-01-01 : Deadlines extended for filing GST
    The government extended the due dates for indirect tax compliance, the government has extended the date for filing annual returns under GST for the financial year 2019-20 to February 28 from the previous deadline of December 31.
  • 2020-12-02 : GST collections for November top ₹1 trillion
    GST revenue scaled ₹1 trillion for the second consecutive month in November, after a sharp decline in the initial months due to the pandemic and the subsequent nationwide lockdown. The government notified that GST collections increased by 1.4% on a year-on-year basis. Out of the ₹1.05 trillion revenue collected, central GST was ₹19,189 crore, state GST was ₹ 25,540 crore, IGST ₹ 51,992 crores and cess ₹8,242 crores.
  • 2020-11-24 : GST registration for an overhaul
    The GST Council law committee has made its recommendations on both new registrations and the removal of current risky taxpayers likely to be interested in the fraud. Comprehensive amendments to the registration procedure for new applicants will soon be considered by the GST Council, which will make the process rigorous for those not opting for Aadhaar-based authentication. The new rules seek to curtail fly-by-night operators that use bogus invoices to take advantage of input tax credits.
*Terms and conditions apply. Credit at sole discretion of lender, which is subject to credit appraisal, eligibility check, rates, charges and terms. Information displayed is indicative and collected from public sources. Read More
Loader
Please wait while your information is being processed...