Outlook Money
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.
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.
1) Engine Capacity: Compact cars with smaller engines are subject to lower rates, whereas larger vehicles like SUVs are placed in higher tax brackets.
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.
Other factors that determine the GST on cars include, vehicle purpose and luxury features.
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.
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