GST on used EVs changed from 12% to 18%-Notification issued!

The Ministry of Finance, through Notification No. 04/2025 - Central Tax (Rate) makes a key change in the tax rate for specified old and used vehicles including Electronic Vehicles (EVs).

The GST rate for such vehicles is increased from 12% to 18% on profit.

Let’s understand the details!

Notification No.04/2025 - Central Tax dated 16.01.2025

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MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

Date: 16.01.2025

Notification No. 04/2025 - Central Tax (Rate)

G.S.R. 59(E).- 1. In exercise of the powers conferred by sub-section (1) of section 11 of the Central Goods and Services Act, 2017 (12 of 2017), the Central Government, on being satisfied that the public interest must do, the recommendations of the Council, hereby makes the following amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 8/2018-Central Tax (Rate), dated the 25th January 2018, published in the Gazette of India, Extraordinary, Part II, section 3,sub-section (i) vide number G.S.R. 82(E), dated the 25th January 2018, namely:-

In the said notification, in the TABLE, against S. No. 4, in column (4), for the entry "6%", the entry "9%" shall be substituted.

2. This notification shall come into force with immediate effect.

[F. No. 190354/2/2025-TRU]

AMREETA TITUS, Dy. Secy.

Note:- The principal notification No. 8/2018-Central Tax (Rate), dated the 25th January 2018, was published in the Gazette of India, Extraordinary, Part II, section 3, sub-section (i), vide number G.S.R. 82(E), dated the 25th January 2018.

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Key Highlights:

1. Amendment in Tax Rate:
   • The notification revises the tax rate for a specific entry under S. No. 4 in the table of Notification No. 8/2018-Central Tax (Rate).
   • The rate is increased from 12% to 18%.
   • Amended rate table is as follows:

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b. Effect of amendment:

• The amendment equalizes GST rates for all used vehicles to 18% on margin i.e. profit amount.
• The sale of the following vehicles will attract 18% GST on margin instead of 12% w.e.f. 16.01.2025:
  1. Old and used Petrol and CNG vehicles having engine capacity less than 1200cc
  2. Old and used Petrol and CNG vehicles having lengths of less than 4000 mm
  3. Old and used Diesel vehicles having engine capacity of less than 1500cc
  4. Old and used Diesel vehicles having lengths of less than 4000 mm
  5. Old and used SUVs and utility vehicles having engine capacity less than 1500cc
  6. Old and used Electronically operated vehicles (EVs)

Conclusion

In conclusion, the recent amendment to the GST rate for old and used vehicles, including EVs, marks a significant policy shift aimed at standardizing the tax structure. With the increase from 12% to 18% GST on the profit margin, this change brings parity across various categories of vehicles, simplifying compliance for stakeholders. However, this revision may also impact the pricing and resale dynamics of used vehicles, particularly in the growing EV segment. As the market adjusts to these changes, it will be essential for buyers and sellers to account for the updated rates in their transactions to ensure smooth compliance with the revised regulations.

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