Used car GST

Understanding the GST Calculation on Buying and Selling Used Cars

September 11, 2023 • 1620 views

GST, which stands for Goods and Services Tax, is a type of value-added tax that serves as an all-encompassing indirect tax, aiming to supplant various other taxes in numerous countries. When dealing with the buying and selling of used cars, GST is typically computed based on the profit or margin attained from the sale of the car. It is generally 18% of the car’s price, amalgamation of 9% CGST and 9% SGST. However, it may vary according to the engine capacity of the cars.

Let’s understand it better with the help of the table given below:

Type

Engine Capacity

GST (%)

Petrol Car

Up to 1200CC

12%

Petro Car

Over 1200CC

18%

Diesel Car

Up to 1500CC

12%

Diesel Car

Over 1500CC

18%

Tax Implications of GST on the Sale of Pre-Owned Cars

As outlined in the GST Act, the application of GST extends to the provision of goods and services within India. When considering second-hand automobiles, GST’s influence varies across two distinct scenarios.

  • Selling used cars by unlicensed vendors: If an unregistered dealer vends a used car to either a registered dealer or a final consumer, GST does not apply. Nevertheless, the purchaser must verify that the seller has settled all pertinent dues like road tax, insurance, and miscellaneous fees. If the seller has any unpaid liabilities, the responsibility falls upon the buyer for settlement.
  • Selling used cars by licensed vendors: When a registered dealer sells a pre-owned car, GST is applied at a rate of 18%. Whether the buyer is a registered dealer or a final consumer, this rate remains constant. However, the GST computation is based on the dealer’s margin, which is the variance between the selling and purchasing prices.

Also Read :- GST Calculation for Secondhand Car Dealers

Influence of GST on the Pre-Owned Car Market

The impact of GST on the resale of used cars has brought mixed impacts within the secondhand car market. At the same time, it has certainly enhanced the transparency of transactions and streamlined the taxation process associated with buying and selling used cars. It has also led to a rise in the purchasing expenses. This is due to the GST being computed based on the dealer’s profit margin.

Tax Implications of GST on the Purchase of Pre-Owned Cars

When purchasing a used car, the percentage of Goods and Services Tax is similar to the sale of the same. It varies according to the engine capacity here as well. This adds to the cost of used cars, making it difficult for individuals to afford them by paying lump sums. With Poonawalla Fincorp’s Used Car Loan, you can buy your desired car without stressing your finances. Alongside, you get high loan amounts up to 100% of the car’s value with flexible repayment tenure.

Conclusion

Now we know how the percentage of GST to be applied changes according to factors like the type and engine capacity of the cars. Let’s not forget that GST on secondhand cars is usually lower than new cars. Therefore, it is preferred by most individuals to go for pre-owned cars and to make it even more affordable, Poonawalla Fissncorp offers Pre-Owned Car Loans at competitive interest rates, with easy and hassle-free loan application process, quick approvals, and flexible repayment tenure. So, apply now and let us be your enabler in getting you your dream car.

Disclaimer

We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Pre-Owned Car Loan disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply

poonawalla fincorp team

Poonawalla Fincorp Team

We are a team of expert writers and editors passionate about providing our readers with authentic and valuable information on finance. Our aim is to simplify financial and finance-related concepts. We strive to help our readers become more aware and empowered to make informed financial decisions.

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