The 55th GST Council Meeting has announced a revised GST structure for used electric vehicles (EVs) in a bid to promote the adoption of new EVs while addressing taxation clarity for used ones.
Key decisions on EV taxation:
- New EVs:
- GST rate: 5%
- This preferential rate continues to encourage the purchase of new EVs and drive India’s green mobility goals.
- Used EVs:
- Sold between individuals: No GST will be applicable.
- Sold by companies or after modification for resale:
- GST rate: 18%
- Tax applied on the margin value (difference between purchase price and selling price).
Finance Minister Nirmala Sitharaman clarified that the decision to impose an 18% GST on used EVs was reached after detailed discussions. While a 5% rate was initially proposed, the Council decided on 18% to balance revenue needs and ensure a consistent tax framework.
This move aims to create a level playing field while incentivizing the adoption of newer, more efficient electric vehicles.
