Used EVs To Attract 18 Percent GST As Council Revises Tax Policy

On Saturday, the Goods and Services Tax (GST) Council recommended changes to GST tax rates, introduced measures to provide relief to individuals, implemented steps to facilitate trade, and proposed actions to streamline GST compliance processes.

The Finance Minister stated that the GST Council has decided to raise the tax rate from 12% to 18% on the sale of all old and used vehicles, including electric vehicles (EVs), except for certain categories already taxed at 18%. These exceptions include the sale of old and used petrol vehicles with an engine capacity of 1200 cc or more and a length of 4000 mm or more, diesel vehicles with an engine capacity of 1500 cc or more and a length of 4000 mm or more, and SUVs.

The GST Council also approved exempting GST on contributions made by general insurance companies from third-party motor vehicle premiums collected for the Motor Vehicle Accident Fund, established under Section 164B of the Motor Vehicles Act, 1988. This fund provides compensation and cashless treatment to road accident victims, including those involved in hit-and-run cases.

Additionally, the Council decided to keep jet fuel (aviation turbine fuel or ATF) outside the 'one-nation-one-tax' framework.

In its 55th meeting, the Council clarified the taxability of popcorn. Caramelized popcorn will continue to attract a tax rate of 18%, while pre-packed and spiced popcorn will be taxed at 12%. Unpacked and unlabelled popcorn will attract a 5% tax. However, no decision was made on the imposition of GST on delivery charges by quick commerce and food delivery platforms.

[Note: GST is applicable only on the Value that represents Margin of the Supplier, that is, the difference between the Purchase price and Selling price (depreciated value if depreciation is claimed) and not on the value of the vehicle. Also, it is not applicable in case of unregistered persons.]