The council meet on Thursday headed by Finance Minister Arun Jaitley made the decision and said the move will be effective from January 25.
Ahead of the union budget, the GST council on Thursday revised the tax rate on 29 items including used cars, a move that will make used cars more affordable now.
The council meet on Thursday headed by Finance Minister Arun Jaitley made the decision and said the move will be effective from January 25.
The rates on medium, large cars and SUVs has been brought down from earlier 28 % to 18 % now. Likewise, rates on small cars and motor vehicles have been reduced from 28% to 12 %. The cess in both of these categories has been removed.
Rajat Sahni, CEO-used cars, of online market place CarDekho welcomed the move and said it will help in streamlining the regulations and transactions covered under tax net buy will also drive the industry to be more organised in longer term.
According to a research done by CarDekho, used cat industry should grow from $18 billion to $60 billion in next over 5 years.
Dr Nagendra Palle, MD & CEO, Mahindra First Choice Wheels said, "A very positive move, relative to what it was before the change. Prior to this change, the effective GST rate was in the range of 29% to 53% on the gross margin including mandatory cess. At these tax rates, the organized used car business was challenged and would have been negative for the entire industry. The reduction in the base GST rate and removal of cess is a very welcome change and should provide impetus to growing the industry and especially to the organized sector."
"Dueto the high GST on larger vehicles, the sales of those vehicles were impacted significantly – to the tune of 25% in our business. With the announced changes in GST rates, we believe the vehicle mix in our business should begin to revert to more “normal” – away from what was a larger focus on small cars - which was the case when GST was first announced," he further said.
Jatin Ahuja, founder and MD of luxury used car company Big Boy Toyz said ,"We welcome this move by the government which revised the new tax regime for Used motor vehicles. The tax rate which now stands at 18% will benefit the industry and boost consumer confidence at large".
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