August 04, 2025
On December 21, 2024, the 55th GST Council Meeting introduced key amendments affecting the taxation of old and used vehicles. This amendment aims to streamline taxation in the automobile resale market while ensuring clarity in compliance.
* As per Notification No. 8/2018-Central Tax (Rate) dated 25th January 2018 ** Notification No. 04/2025-Central Tax (Rate) dated 16th January 2025
GST is applicable only on the difference between purchase price and selling price (or depreciated value, if applicable). Negative margins are ignored. No margin-based exemption is allowed if ITC was claimed earlier.
With the new 18% tax rate, the cost of used cars may increase, especially for those resold by dealers who are likely to pass on the tax to buyers.
If you’re buying or selling a used car privately between two individuals, GST does not apply, as the rules focus on dealers.
Recommendations made on 21 Dec 2024, notification issued 16 Jan 2025, effective immediately.
Author:Meghana
Prepared On:04.08.2025
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