The Goods and Services Tax Council, headed by Union finance minister Nirmala Sitharaman and comprising representatives of all states and UTs, on Saturday approved an 18 per cent tax on the margin value of used electric vehicles sold by businesses.
Nirmala Sitharaman, after the 55th GST Council meeting, said the panel decided to raise the rate of tax to 18 per cent from 12 per cent on all used EV sales, just as in case of non-electric vehicles, and it will be applicable only on the value that represents margin – the difference between the purchase price and selling price (depreciated value if depreciation is claimed) – by businesses.
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The sale and purchase of used vehicles by individuals will continue to be exempt from GST.
However, the decision drew sharp reactions from Opposition leaders, with Aam Aadmi Party national convenor Arvind Kejriwal and Samajwadi Party chief Akhilesh Yadav accusing the Centre of working for the “rich” class.
Arvind Kejriwal said the central government is “crushing” the dreams of middle-class people and that the Bharatiya Janata Party government is only working for the rich and the industrialists.
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“Purchasing a car is a big deal for an ordinary middle-class family, but the central government is crushing their dreams by increasing taxes even on old cars. The BJP government at the centre is working only for the rich and industrialists. It is only providing inflation, taxes and pain to the common man and the poor of the country,” Arvind Kejriwal posted on X.
Akhilesh Yadav also hit out at the Centre alleging an environment of “uncertainty” and said the BJP government has made the GST a game of “snake and ladder”.
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“The BJP has made GST a game of snakes and ladders. Sometimes they suddenly increase GST on some items, sometimes they reduce it to make a profit for their supporters who donate money. This creates confusion even among honest businessmen and officials, which the corrupt take advantage of,” the former CM posted on X.
He added, “Businessmen have even been heard saying that the BJP wants to maintain an environment of uncertainty by repeatedly changing the GST rates so that they can keep getting opportunities to collect money from small traders and shopkeepers. That is why by the time businessmen understand one thing about GST, the government changes the rules.”
GST on used car
Currently, old and used vehicles, including EVs, are subject to 12% GST, except for petrol vehicles with an engine capacity of 1200 cc or more and a length of 4000 mm or more, diesel vehicles with an engine capacity of 1500 cc or more and a length of 4000 mm or more, and SUVs, which attract 18% GST.
Tax on popcorn
The GST Council also clarified the taxability of popcorn, saying caramelised popcorn will continue to attract tax at the rate of 18 per cent. However, pre-packed and spiced popcorn will attract 12 per cent, while 5 per cent will be levied on unpacked and unlabelled ones.
It has been decided to regularise the issues for the past on “as is where is” basis… “It is a clarification being recommended by the GST Council to settle the disputes arising out of interpretation,” an official statement said.
The panel deferred decisions on reducing tax rate on insurance products as also on levy of the tax on food delivery by aap-based platforms.