Confusion spreads on GST issue of old vehicles, Finance Ministry issued FAQ

GST Council Meeting: Many important decisions were taken in the recent GST Council meeting, after which sharp reactions were seen on social media. The opposition also tried to corner the government on this issue. The biggest decision in the meeting was to impose 18% GST on old vehicles. However, after this, the government has also issued an FAQ to clear the confusion of the public by clarifying its position.

Has buying a car become expensive?

If you buy an old car from Registered Vendors, it may be more expensive than before. The reason behind this is that the GST Council has increased the GST on old small cars (1200 cc capacity and less than four meters in length) and old electric cars from 12% to 18%. However, there will be no GST on buying or selling a car from a friend or relative at a personal level.

GST will be applicable only on the margin of Registered Vendors, not on the total price of the vehicle. For example, if a company keeps a margin of Rs 50,000 while selling a car worth Rs 5 lakh, then GST will be levied only on that Rs 50,000, not on the entire price.

Relief on Penal Charges

The GST Council has removed the GST on the Penal Charges levied in case of not paying the monthly installment or outstanding payment on time. This is expected to provide relief to the common customers.

No double taxation

The government has also clarified that a single amount will not be taxed twice. For example, if 12% GST has already been paid on an old car, then GST will be applicable only on the margin made during the purchase and sale.

What will change for the common people?

Buying an old car from Registered Vendors can be expensive as 18% GST will be levied on the margin.

GST will not have any effect on individual transactions.

Removal of GST on Penal Charges will provide relief on EMI delays.

Conclusion

The GST Council's decision has created a stir in social media and political circles, but the government has clarified that this decision will only apply to the margins of Registered Vendors. This will not cause any additional burden to small traders and individual buyers.

According to the Finance Ministry, this step has been taken to simplify the tax process and prevent tax evasion.