{"id":12498,"date":"2025-09-25T15:15:52","date_gmt":"2025-09-25T09:45:52","guid":{"rendered":"https:\/\/razorpay.com\/learn\/?p=12498"},"modified":"2025-12-29T15:36:21","modified_gmt":"2025-12-29T10:06:21","slug":"gst-on-cars","status":"publish","type":"post","link":"https:\/\/razorpay.com\/learn\/gst-on-cars\/","title":{"rendered":"GST on Cars in India: GST Rates for New and Electric Cars"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Domestic car sales in the last financial year <\/span><a href=\"https:\/\/economictimes.indiatimes.com\/industry\/auto\/auto-news\/domestic-car-sales-in-last-financial-year-grew-by-nearly-9-to-a-record-4-23-mn-units\/articleshow\/108951885.cms\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">grew by nearly 9% to a record 4.23 million units<\/span><\/a><span style=\"font-weight: 400;\">, underscoring the significant momentum in the automotive industry. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">This growth highlights the car industry&#8217;s crucial role in economic development, from job creation to technological advancements. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">An important factor influencing this sector is the Goods and Services Tax (GST), which introduced a uniform tax structure in India. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Before GST, car taxes were much higher, now the new system has streamlined rates based on vehicle type and fuel.<\/span><\/p>\n<p>This blog will take you through the different GST rates on cars, their impact, compensation cess, and more.<\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_80 counter-hierarchy ez-toc-counter ez-toc-transparent ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69d11e14425fd\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69d11e14425fd\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/razorpay.com\/learn\/gst-on-cars\/#What-is-GST-on-Cars\" >What is GST on Cars?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/razorpay.com\/learn\/gst-on-cars\/#What-are-the-Factors-for-Classifying-GST-on-Cars\" >What are the Factors for Classifying GST on Cars?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/razorpay.com\/learn\/gst-on-cars\/#GST-on-Cars-Based-on-Engine-Capacity\" >GST on Cars Based on Engine Capacity\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/razorpay.com\/learn\/gst-on-cars\/#GST-on-Cars-Based-on-Fuel-Type\" >GST on Cars Based on Fuel Type<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/razorpay.com\/learn\/gst-on-cars\/#GST-Rate-on-Electric-Cars\" >GST Rate on Electric Cars\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/razorpay.com\/learn\/gst-on-cars\/#GST-on-SUVs-and-Luxury-Cars\" >GST on SUVs and Luxury Cars<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/razorpay.com\/learn\/gst-on-cars\/#GST-on-Second-hand-Cars\" >GST on Second-hand Cars\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/razorpay.com\/learn\/gst-on-cars\/#Compensation-Cess-in-GST-Act\" >Compensation Cess in GST Act<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/razorpay.com\/learn\/gst-on-cars\/#GST-Compensation-Cess-on-Cars\" >GST Compensation Cess on Cars<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/razorpay.com\/learn\/gst-on-cars\/#GST-Impact-on-the-Automobile-Industry\" >GST Impact on the Automobile Industry<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/razorpay.com\/learn\/gst-on-cars\/#GST-Calculation-on-Cars\" >GST Calculation on Cars<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/razorpay.com\/learn\/gst-on-cars\/#Exemptions-for-GST-on-Car\" >Exemptions for GST on Car<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/razorpay.com\/learn\/gst-on-cars\/#Conclusion\" >Conclusion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/razorpay.com\/learn\/gst-on-cars\/#Frequently-Asked-Questions-FAQs\" >Frequently Asked Questions (FAQs)<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"What-is-GST-on-Cars\"><\/span><b>What is GST on Cars?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">In India (from Sep 22, 2025), cars fall into three GST slabs: 5% for EVs and fuel-cell vehicles, 18% for small cars (length \u2264 4,000 mm with engine limits), and 40% for all other cars, as notified by the Government. The lowest GST rate of 5% is reserved for vehicles designed for use by disabled individuals and related accessories. However, GST is not the sole tax on motor vehicle sales; a compensation cess of up to 22% can be added on top of GST.<\/span><\/p>\n<p><strong><em>Read About: <a href=\"https:\/\/razorpay.com\/learn\/gst-rates-goods-and-service-tax-rates-slabs\/\">Updated List of Goods and Service Tax (GST) Rates\u00a0<\/a><\/em><\/strong><\/p>\n<p><strong><em><span data-sheets-root=\"1\">Related Read: <a href=\"https:\/\/razorpay.com\/learn\/gst-on-sale-of-old-and-used-cars\/\">GST on Used Cars in India<\/a><\/span><br \/>\n<\/em><\/strong><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What-are-the-Factors-for-Classifying-GST-on-Cars\"><\/span><b>What are the Factors for Classifying GST on Cars?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The GST on cars in India is primarily determined by several key factors, including the engine capacity and length of the car, which influences the applicable tax rate. Vehicle type, such as passenger cars, SUVs, or commercial vehicles, also plays a significant role in determining GST rates. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Additionally, the classification of the vehicle as a hybrid or electric vehicle can affect the tax rate, with incentives often provided for environmentally friendly options. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Other considerations include the use of the vehicle (personal or commercial), the presence of luxury features, and specific government policies aimed at promoting certain types of vehicles or technologies. Together, these factors ensure that the GST rates are tailored to encourage efficiency, sustainability, and appropriate usage.<\/span><\/p>\n<p><em><strong>Related Read: <a href=\"https:\/\/razorpay.com\/learn\/gst-exemption\/\">List of Goods and Services Exempt Under GST<\/a><\/strong><\/em><\/p>\n<h2><span class=\"ez-toc-section\" id=\"GST-on-Cars-Based-on-Engine-Capacity\"><\/span><b>GST on Cars Based on Engine Capacity\u00a0<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The GST rates for cars in India vary based on engine capacity, offering notable reductions from pre-GST rates. This restructuring aims to simplify taxation and reduce the overall tax burden for consumers.<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td>\n<h3><b>Car Category<\/b><\/h3>\n<\/td>\n<td>\n<h3><b>Pre-GST rate<\/b><\/h3>\n<\/td>\n<td>\n<h3><b>Post-GST Rate (Updated Sept 2025)<\/b><\/h3>\n<\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Vehicles under 1200cc engine capacity<\/span><\/td>\n<td><span style=\"font-weight: 400;\">39%<\/span><\/td>\n<td><b>28% GST + 1% Cess = 29%<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Vehicles between 1200-1500cc engine capacity<\/span><\/td>\n<td><span style=\"font-weight: 400;\">40%<\/span><\/td>\n<td><b>28% GST + 3% Cess = 31%<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Vehicles above 1500cc engine capacity(non-SUV)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">43%<\/span><\/td>\n<td><b>28% GST + up to 15% Cess = 43%<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">SUV cars with 1500cc engine capacity or above<\/span><\/td>\n<td><span style=\"font-weight: 400;\">46%<\/span><\/td>\n<td><b>28% GST + 22% Cess = 50%<\/b><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<p><em><strong>Related Read: <a href=\"https:\/\/razorpay.com\/learn\/gst-on-sale-of-old-and-used-cars\/\">GST on Used Cars<\/a><\/strong><\/em><\/p>\n<h2><span class=\"ez-toc-section\" id=\"GST-on-Cars-Based-on-Fuel-Type\"><\/span><b>GST on Cars Based on Fuel Type<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">GST rates for vehicles are determined by their fuel type, creating a varied tax landscape. These rates are structured to reflect the environmental impact of different fuel sources, influencing the cost of owning and operating a car based on its fuel efficiency and emissions.<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td>\n<h3><b>Type of Vehicle<\/b><\/h3>\n<\/td>\n<td>\n<h3><b>Capacity of fuel tank<\/b><\/h3>\n<\/td>\n<td>\n<h3><b>Pre-GST rate<\/b><\/h3>\n<p><b>(Older Reference)<\/b><\/td>\n<td>\n<h3><b>Post-GST Rate (Updated Sept 2025)<\/b><\/h3>\n<\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Petrol Vehicle<\/span><\/td>\n<td><span style=\"font-weight: 400;\">below 1.2 Litre<\/span><\/td>\n<td><span style=\"font-weight: 400;\">31.6%<\/span><\/td>\n<td><b>28% GST + 1% Cess = 29%<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Diesel Vehicle<\/span><\/td>\n<td><span style=\"font-weight: 400;\">More than 1.5 Litre<\/span><\/td>\n<td><span style=\"font-weight: 400;\">34.25%<\/span><\/td>\n<td><b>28% GST + 3% Cess = 31%<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Both Petrol and Diesel Vehicle<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Petrol over 1.2 L and Diesel over 1.5Litre<\/span><\/td>\n<td><span style=\"font-weight: 400;\">45.7%<\/span><\/td>\n<td><b>28% GST + up to 15% Cess = 43%<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Bigger than 4-meter vehicle runs with both petrol-diesel<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Any type<\/span><\/td>\n<td><span style=\"font-weight: 400;\">56%<\/span><\/td>\n<td><b>28% GST + up to 22% Cess = 50%<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Electric vehicles<\/span><\/td>\n<td><span style=\"font-weight: 400;\">NIL<\/span><\/td>\n<td><span style=\"font-weight: 400;\">21.5%<\/span><\/td>\n<td><b>5% GST (No Cess)<\/b><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><span class=\"ez-toc-section\" id=\"GST-Rate-on-Electric-Cars\"><\/span><b>GST Rate on Electric Cars\u00a0<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><strong>Electric cars currently attract a 5% Goods and Services Tax (GST)<\/strong>. Previously, both electric vehicles and their associated charging equipment were subject to an 18% GST. However, this was revised during the 36th GST Council meeting in July 2019, with the lower rate taking effect from August 1, 2019. Importantly, this 5% GST applies uniformly to all electric vehicles, regardless of whether they are used for personal or commercial purposes.<\/p>\n<p><span style=\"font-weight: 400;\">To illustrate the impact of this change, consider an electric car priced at \u20b910 lakh. Under the old GST rate of 18%, the tax amount would have been \u20b91.8 lakh, bringing the total cost to \u20b911.8 lakh. With the reduced GST rate of 5%, the tax on the same car would now be \u20b950,000, making the total cost \u20b910.5 lakh. This substantial reduction highlights the financial benefits of the new GST policy for EV buyers.<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td>\n<h3><b>Vehicle Type<\/b><\/h3>\n<\/td>\n<td>\n<h3><b>Previous GST Rate<\/b><\/h3>\n<\/td>\n<td>\n<h3><b>Current GST Rate<\/b><\/h3>\n<\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Electric Vehicle<\/span><\/td>\n<td><span style=\"font-weight: 400;\">18%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">5%<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><span class=\"ez-toc-section\" id=\"GST-on-SUVs-and-Luxury-Cars\"><\/span><b>GST on SUVs and Luxury Cars<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><strong>SUVs in India are subject to a 28% Goods and Services Tax (GST)<\/strong>. However, electric SUVs are an exception, enjoying a significantly lower GST rate of 5%. This reduced tax is a government incentive to promote electric vehicles and reduce carbon emissions.<\/p>\n<p><span style=\"font-weight: 400;\">An SUV, or sport utility vehicle, is a versatile type of automobile that blends the characteristics of traditional passenger cars with features typically found in off-road vehicles. This combination often includes elevated ground clearance and four-wheel drive capabilities, making SUVs suitable for a range of terrains. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">In India, SUVs come in various forms, from compact models to spacious, seven-seater luxury versions, each subject to different tax rates.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"GST-on-Second-hand-Cars\"><\/span><b>GST on Second-hand Cars\u00a0<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\"><strong>The GST rate on used cars is set at 12% of the transaction value.<\/strong> However, this tax is applied only to the dealer&#8217;s margin, which is the profit earned on the sale. For example, if a car is purchased for Rs. 5 lakh and sold for Rs. 6 lakh, GST is calculated on the Rs. 1 lakh profit.<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td>\n<h3><b>Car Type<\/b><\/h3>\n<\/td>\n<td>\n<h3><b>Engine Capacity<\/b><\/h3>\n<\/td>\n<td>\n<h3><b>GST<\/b><\/h3>\n<\/td>\n<td>\n<h3><b>Compensation Cess<\/b><\/h3>\n<\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Petrol<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Up to 1200cc<\/span><\/td>\n<td><span style=\"font-weight: 400;\">12%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">0<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Petrol<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Above 1200cc<\/span><\/td>\n<td><span style=\"font-weight: 400;\">12%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">0<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Diesel<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Up to 1500cc<\/span><\/td>\n<td><span style=\"font-weight: 400;\">12%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">0<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Diesel<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Above 1500cc<\/span><\/td>\n<td><span style=\"font-weight: 400;\">12%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">0<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><span class=\"ez-toc-section\" id=\"Compensation-Cess-in-GST-Act\"><\/span><b>Compensation Cess in GST Act<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">A compensation cess, introduced with the GST Act, is an additional charge on certain goods to offset potential revenue losses for manufacturing states under the GST regime. Key items subject to this cess include motor vehicles, aerated water, solid fuels like coal, and tobacco products. Notably, this cess does not apply to exported goods, and exporters can claim refunds for any paid cess. Businesses under the <a href=\"https:\/\/razorpay.com\/learn\/gst-composition-scheme-benefits\/\">composition scheme<\/a> are also exempt. Initially set for five years, this cess was in effect until July 1, 2022.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"GST-Compensation-Cess-on-Cars\"><\/span><b>GST Compensation Cess on Cars<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">At the time of vehicle sales, a compensation cess is added to the GST on cars. Here are the compensation cess rates for different types of vehicles:<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td>\n<h3><strong>Vehicle Type<\/strong><\/h3>\n<\/td>\n<td><b>Compensation Cess (Sept 2025)<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Petrol\/CNG\/LPG car &lt; 1200cc, &lt; 4 meters\u00a0<\/span><\/td>\n<td><span style=\"font-weight: 400;\">1%<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Petrol\/CNG\/LPG car &lt; 1200cc, &gt; 4 meters\u00a0<\/span><\/td>\n<td><span style=\"font-weight: 400;\">15%<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Petrol\/CNG\/LPG car &gt; 1200cc<\/span><\/td>\n<td><b>15% (updated, earlier 22%)<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Diesel car &lt; 1500cc, &lt; 4 meters\u00a0<\/span><\/td>\n<td><span style=\"font-weight: 400;\">3%<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Diesel car &lt; 1500cc, &gt; 4 meters<\/span><\/td>\n<td><b>15% (updated, earlier 20%)<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Diesel car &gt; 1500cc, &gt; 4 meters, ground clearance &gt; 170mm<\/span><\/td>\n<td><span style=\"font-weight: 400;\">22%<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Electric cars<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Nil<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Ambulances<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Nil<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Three-wheeler motorized vehicles<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Nil<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Fuel cell vehicles<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Nil<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Motorcycles\/mopeds up to 350cc<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Nil<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Motorcycles over 350cc<\/span><\/td>\n<td><span style=\"font-weight: 400;\">3%<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><span class=\"ez-toc-section\" id=\"GST-Impact-on-the-Automobile-Industry\"><\/span><b>GST Impact on the Automobile Industry<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The introduction of GST simplified the automobile tax structure by replacing the earlier combined excise and VAT rates of 26.5% to 44% with a uniform 28% GST, along with an additional compensation cess of 1% to 22% depending on engine size, vehicle length, and type. This change benefits consumers with lower overall taxes. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Additionally, importers and dealers now have the advantage of claiming GST on imported and sold goods, which was not possible with excise duty and VAT.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For manufacturers, GST facilitates cheaper procurement of auto parts due to an improved supply chain. Cars and bikes are taxed at 28%, with additional cesses ranging from 1% to 15% based on vehicle type.<\/span><\/p>\n<p><strong><em>Related Read: <a href=\"https:\/\/razorpay.com\/learn\/gst-on-bikes\/\">GST on Bikes: 100cc, 125cc, Electric &amp; Other Rates<\/a><\/em><\/strong><\/p>\n<h2><span class=\"ez-toc-section\" id=\"GST-Calculation-on-Cars\"><\/span><b>GST Calculation on Cars<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">To calculate GST on cars, you need to understand the applicable GST rate and any additional cess, which varies depending on the type and fuel category of the vehicle. Here&#8217;s a simple formula:<\/span><\/p>\n<p><b>Total Tax = Ex-showroom Price \u00d7 (GST Rate + Cess Rate)<\/b><\/p>\n<p><b>Example:<\/b><b><br \/>\n<\/b><span style=\"font-weight: 400;\">If the ex-showroom price of a diesel car (engine capacity under 1500cc) is \u20b96,00,000:<\/span><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">GST rate: 28%<\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Compensation Cess: 3%<\/span><b><br \/>\n<\/b><\/li>\n<li><b>Total Tax Rate: 31%<\/b><b><br \/>\n<\/b><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">So,<\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><span style=\"font-weight: 400;\">Total Tax = \u20b96,00,000 \u00d7 31% = \u20b91,86,000<\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><span style=\"font-weight: 400;\">Final Price = \u20b96,00,000 + \u20b91,86,000 = \u20b97,86,000<\/span><\/p>\n<p><span style=\"font-weight: 400;\">You can also use a <a href=\"https:\/\/razorpay.com\/gst-calculator\/\">GST calculator<\/a> for faster and more accurate results to determine the on-road price of your car after GST and cess.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Exemptions-for-GST-on-Car\"><\/span><b>Exemptions for GST on Car<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Most vehicles are subject to standard GST rates, but a few categories enjoy exemptions or concessional GST rates to promote sustainability and inclusivity.<\/span><\/p>\n<h3><b>Electric Vehicles (EVs): <\/b><\/h3>\n<p><span style=\"font-weight: 400;\">EVs attract a concessional GST rate of 5% to promote eco-friendly transport and reduce dependency on fossil fuels.<\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><\/p>\n<h3><b>Ambulances: <\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Ambulances are taxed at a reduced GST rate of 5%, with nil compensation cess. This helps hospitals and healthcare providers access essential emergency vehicles at a lower cost.<\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><\/p>\n<h3><b>Vehicles for Differently-Abled Persons: <\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Cars purchased by or for physically challenged individuals can qualify for GST exemptions, provided they meet certain government-specified eligibility criteria.<\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><\/p>\n<p><span style=\"font-weight: 400;\">These exemptions support government initiatives around green mobility, public health, and accessibility for people with disabilities.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span><b>Conclusion<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The GST framework has streamlined car taxation, providing clear rates based on vehicle type and fuel, and promoting a shift towards greener options with lower taxes on electric vehicles. This approach benefits both consumers and the industry by simplifying tax structures and encouraging environmentally friendly choices.<\/span><\/p>\n<p><em><b>Related Read: <\/b><a href=\"https:\/\/razorpay.com\/learn\/gst-on-transport-services\/\"><b>GST on Transport Services for Road, Rail, Air and Water Ways\u00a0<\/b><\/a><\/em><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Frequently-Asked-Questions-FAQs\"><\/span><b>Frequently Asked Questions (FAQs)<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><b>1. Is GST applicable on the sale of used cars by a company?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Yes, GST is applied to the dealer&#8217;s margin on the sale of used cars.<\/span><\/p>\n<h3><b>2. Can we claim GST on cars?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Businesses can claim GST on car purchases if the vehicle is used for business purposes.<\/span><\/p>\n<h3><b>3. How to calculate GST cess on cars?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">GST cess is calculated based on the vehicle type, engine capacity, and other specifications. For more details visit the <\/span><a href=\"https:\/\/cbic-gst.gov.in\/gst-goods-services-rates.html\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">GST website<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<h3><b>4. Can we claim GST input on car insurance?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">GST input credit on car insurance is not allowed for personal vehicles but can be claimed for business vehicles.<\/span><\/p>\n<h3><b>5. What is the GST rate for Maruti Swift?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">If you\u2019re buying a Maruti Swift in India (petrol variant), the total GST applicable is 29%.<\/span><\/p>\n<h3><b>6. Has GST on cars reduced?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Yes, GST rates have been reduced for certain categories, including electric vehicles.<\/span><\/p>\n<h3><b>7. Will GST be reduced on cars?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Potential changes in GST rates for cars could be influenced by decisions made in upcoming GST Council meetings, reflecting shifts in government policy and economic priorities.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Domestic car sales in the last financial year grew by nearly 9% to a record 4.23 million units, underscoring the significant momentum in the automotive industry. This growth highlights the car industry&#8217;s crucial role in economic development, from job creation to technological advancements. An important factor influencing this sector is the Goods and Services Tax<\/p>\n","protected":false},"author":151156612,"featured_media":13624,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3913],"tags":[3933,3820],"class_list":{"0":"post-12498","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-gst-rates-goods-and-service-tax-rates-slabs","8":"tag-gst-on-cars","9":"tag-gst-rates"},"_links":{"self":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/12498","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/users\/151156612"}],"replies":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/comments?post=12498"}],"version-history":[{"count":22,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/12498\/revisions"}],"predecessor-version":[{"id":18616,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/12498\/revisions\/18616"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/media\/13624"}],"wp:attachment":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/media?parent=12498"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/categories?post=12498"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/tags?post=12498"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}