Who does this apply to?

This GST applies only to GST-registered entities—companies that buy and sell used cars for profit. Platforms like Cars24 or Spinny. If you’re buying or selling a car directly between individuals, this GST doesn’t apply.

Is this a new tax?

No, this is not a new tax. Earlier, some used cars attracted 12% GST. Now, the rate has been increased to 18% for certain categories, like Electric Vehicles (EVs).

Does GST apply to losses?

GST is charged only on profits. A dealer buys a car for ₹10 lakh and sells it for ₹11 lakh → GST is charged on the ₹1 lakh profit. (₹1 lakh × 18% = ₹18,000) If the dealer sells the same car at a loss (₹10 lakh → ₹9 lakh), no GST is charged.

What does this mean for buyers?

If you’re buying a car from a GST-registered dealer, the tax is included in the price. Previously, the GST rate was 12%, but now it’s 18%—which will increase the final price for buyers.

A bit of history

Before 2018, used cars were taxed at a 28% GST rate. This was later reduced to 12%–18% based on the car type. Now, all used cars sold by GST-registered dealers will uniformly attract 18% GST.

Key Takeaways

GST on used cars applies only to GST-registered entities (not individuals). The tax is calculated only on profits.