New Delhi
Buying cars within the country will become expensive from January 1, 2025. Almost all companies are going to increase the prices of their cars by up to 4%. That means there is a good opportunity to buy a car till 31st December. However, in the meantime, buying old cars has also become expensive. Yes, the demand for old cars is very high in the market, but now customers will have to spend more money to buy them. Actually, in the 55th meeting, the GST Council has decided to increase the tax on used cars from 12% to 18%. The new rates decided by the Council will be applicable only on vehicles purchased by companies or dealers working in the old vehicle sector.
If you are selling your used car through a registered dealer, then this GST will be applicable. If you are selling the car directly, you will not have to pay this GST. Thus, you have to keep this in your mind while deciding the right price. The new GST rate on used cars will not be applicable to personal buyers. This means that if you buy a used car directly from someone, you will have to pay only 12% tax instead of 18% GST.
On the other hand, you will have to pay 18% GST even if you sell a used electric vehicle. However, you have to pay 5% GST on the purchase of a new EV. Due to increase in GST rate, the difference between the prices of new and old cars is going to reduce. Apart from this, the sale of old cars will also be affected. Suppose you buy a car for Rs 18 lakh. If you sell it to any friend or relative or acquaintance for Rs 13 lakh, then no GST will be charged.
On the other hand, if a dealer buys a car for Rs 13 lakh and sells it for Rs 17 lakh, then 18% GST will have to be paid only on the profit margin of Rs 4 lakh. This means that now while buying an old car, whether it is petrol, diesel or EV, 18% tax will have to be paid on the profit margin. Overall, this will increase the prices of second cars.
