GST On Cars In India: Here Is What You Need To Know

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Tax on Cars in India

When purchasing a car, one of the major factors that can affect its final cost is the 'Tax' implications associated with the purchase. In India, this is represented by the Goods and Services Tax (GST). Tax structure varies depending on the type of vehicle, engine size, and fuel type.

What is GST on cars

In India, GST rates on cars vary significantly, ranging from 5 percent to 28 percent, based on the type of vehicle being purchased. Additionally, a compensation cess of up to 22 percent may be imposed.

Factors That Determine GST

1) Engine CapacityCompact cars with smaller engines are subject to lower rates, whereas larger vehicles like SUVs are placed in higher tax brackets.

engine

2) Fuel Type

The GST rate is also influenced by the type of fuel the car uses, such as petrol, diesel, or alternative fuels. In this scenario, electric vehicles benefit from a substantial tax reduction.

Fuel

Other factors

Other factors that determine the GST on cars include, vehicle purpose and luxury features.

GST On Electric Cars

To encourage the use of electric vehicles, the government has reduced the GST rates on EVs from 18 percent to 5 percent. This reduction is applicable to both personal and commercial electric vehicles.

GST On SUVs and Luxury Cars

SUVs, renowned for their toughness and adaptability, incur a 28 per cent GST. Additionally, luxury SUVs and those with larger engine capacities face extra cess rates of up to 22 per cent, based on criteria such as engine size and ground clearance.

Compiled by Syed Muskan

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