18% GST on used cars: Do you have to pay tax on selling your car?

The Goods and Services Tax Council's decision to increase the GST rate on old and used vehicles to 18% has stirred discussions across the country. FINANCE MINISTER'S CLARIFICATION SPARKS CONFUSION While the increase in GST aims to streamline tax rates across different types of vehicles, earlier clarification by Finance Minister Nirmala Sitharaman on the issue left buyers and sellers unsure about how the new rates would affect them. WHY WAS 18% GST LEVIED ON SALE OF USED CARS Explaining the decision, Amit Malviya, In-charge of the BJP’s National Information & Technology Department, clarified that the 18% GST is calculated only on the margin earned by dealers—the difference between the sale price and purchase price of the vehicle—and not on the total value of the vehicle. “This method was also in place during the UPA era as ‘Service Tax’ and continued until 2017.” Previously, old and used petrol, LPG, or CNG vehicles with an engine capacity of 1200 cc or more, as well as diesel vehicles with engines of 1500 cc or more, were already subject to 18% GST since 2018.