55th GST Council Sets 18% Tax on Margins for Second-Hand EV Sales
The Union Minister for Finance and Corporate Affairs, Nirmala Sitharaman, chaired the 55th Goods and Service Tax ( GST ) Council meeting in Jaisalmer, Rajasthan on December 21, 2024. The GST Council addressed key taxation issues relating to electronic vehicles ( EVs ), providing clarity for buyers, sellers and businesses involved in the EV market. The Finance Minister announced that in...
The Union Minister for Finance and Corporate Affairs, Nirmala Sitharaman, chaired the 55th Goods and Service Tax ( GST ) Council meeting in Jaisalmer, Rajasthan on December 21, 2024. The GST Council addressed key taxation issues relating to electronic vehicles ( EVs ), providing clarity for buyers, sellers and businesses involved in the EV market.
The Finance Minister announced that in the matter of the resale of electronic vehicles, if registered dealers sell old or used EVs after buying them and making necessary modifications which add value or refurbish the vehicle before reselling such cars, then such sales are to attract 18% GST. This 18% GST rate will be applied on the profit margin, not the entire resale value. This move ensures fairness and prevents double taxation, which is key to transparency in the pre-owned EV market.
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The council upholds that no GST will apply to direct sales between individuals. In the press meeting, the Finance Minister, Nirmala Sitharaman, clarified that imposing 18% GST on sellers' profit margins has been a step towards formalising the EV market.
The Minister asserted that this is a much-needed step in the EV market as the market is not saturated. Taxing margins instead of entire sale prices prevents inflated tax burdens and keeps EVs affordable and accessible to buyers. The minister also pointed out that the government of India wants to promote EVs to promote the sustainability of such vehicles.
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The 55th GST Council meeting was attended by Union Minister of State for Finance Shri Pankaj Chaudhary; the Chief Ministers of Goa, Haryana, Jammu and Kashmir, Meghalaya, and Odisha; the Deputy Chief Ministers of Arunachal Pradesh, Bihar, Madhya Pradesh, Rajasthan, and Telangana; as well as the Finance Ministers of various States and Union Territories. Senior officials, including the Secretary of the Department of Revenue, Chairpersons and Members of CBIC, and other key representatives from the Ministry of Finance, were also present.
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