On Saturday, the 55th GST Council meeting introduced several changes to the Goods and Services Tax framework. Among these, two key decisions garnered significant attention: the introduction of GST on popcorn and an increase in the tax rate on second-hand vehicles, including electric vehicles (EVs), from 12% to 18%. These proposals sparked widespread criticism on social media, with users ridiculing Finance Minister Nirmala Sitharaman.
Amidst the backlash, misinformation began circulating on social media. A viral claim suggests that individuals selling their used cars would be taxed on the profit—the difference between the car’s original purchase price and its resale price. To substantiate this claim, a 39-second video clip of Finance Minister Nirmala Sitharaman has been widely shared online.
Congress supporter Bhavika Kapoor claimed, ‘As per Sitharaman: I bought my diesel car in 2014 :Rs. 24 lacs. I sold my diesel car in 2024 : Rs 3 lacs 2024. Therefore, I have to pay 18% Goods and Services Tax, on 21 lacs ! (Margin as per her). GST : 21Lx 18% = 3,78,000. I won’t get anything from my car, top of it, I will have to pay Rs 78,000 from my pocket to conclude the transaction. Hello Nimmo tai, are you in your senses? What kind of extortion is this? Moorkh aurat.
Ankit Moyank stated, ‘I bought a car in 2014 for ₹6 lakhs . If I sell it today, I will get ₹1 lakh. As per new rules, I will have to pay 18% Goods and Services Tax on the margin (₹6 lakhs – ₹1 lakh = ₹5 lakhs). So after selling the car, – I will get ₹10k – Modi Govt will get ₹90k. RIP middle class.’
Srinivas BV asserted, ‘Suppose you buy a car worth 20 lakhs :- You pay 18 to 28% Goods and Services Tax, while purchasing! Now when you sell the same car for Rs 10 lakh after it becomes old, then once again you will pay 18% GST to the recovery agent on the depreciation amount. Are you enjoying the good days ..??’
Besides this, Mohit Chauhan, Neeraj, Veena Jain, Arpit Sharma and Avishek Goyal also shared similar claims.
We began our fact-checking process by searching for relevant information on the topic. The Times of India article published on December 21, 2024, clarified that the GST Council decided to increase the GST rate on second-hand vehicles, including EVs, from 12% to 18%. This tax will only apply to the margin earned by the seller (the difference between the purchase price and selling price, adjusted for depreciation if claimed).
Currently, GST on old and used vehicles (other than certain high-capacity petrol and diesel vehicles) is set at 12%. For high-capacity petrol vehicles (engine capacity of 1200 cc or more and length exceeding 4000 mm), diesel vehicles (engine capacity of 1500 cc or more and length exceeding 4000 mm), and SUVs, the rate is already 18%. The Council has now made the rate uniform at 18% for all second-hand vehicles, including EVs.
Another Times of India article further clarified that this revised GST rate applies only to transactions by registered dealers or businesses reselling used vehicles. Private transactions between individuals remain exempt from GST. This ensures that individual car owners selling their vehicles privately are not affected by the change.
Moreover, the Tata Capital article confirmed that GST applies differently depending on whether the seller is registered under GST:
• Unregistered sellers (individuals): If a private individual sells a used car, the transaction is exempt from GST.
• Registered sellers (dealers): Registered dealers must charge GST on the sale of used cars, as these transactions are considered business activities under GST regulations.
Historically, GST on used cars was 28% plus an additional cess of 1%-15%, making second-hand cars expensive and shrinking the market. In 2018, the GST Council reduced the rate to 12%-18% and removed the additional cess, which significantly lowered used car prices and boosted the market.
Therefore, the claim that individuals selling cars privately will be taxed on the difference between the purchase price and selling price is false. GST applies only to registered dealers reselling vehicles.
Another claim circulating on social media suggests that GST would be charged even in cases where a seller incurs a loss, meaning the selling price of a vehicle is less than its purchase price. This claim is false.
The truth: Rule 32(5) of the Central Goods and Services Tax (CGST) Rules, 2017, explicitly addresses this situation. It states that if the value of supply (calculated as the difference between the purchase price and the selling price) is negative, it will be ignored for GST purposes. In simpler terms, no GST will be charged when the selling price of a used vehicle is lower than its purchase price. GST is only applicable on the profit margin, if any.
1. Applicability of GST: The 18% GST applies only to registered dealers or businesses involved in the resale of used vehicles. It is calculated on the margin earned (difference between the buying and selling price, adjusted for depreciation).
2. Private Sales: Transactions involving the sale of used vehicles between private individuals remain completely exempt from GST. This exemption ensures that regular car owners are not impacted by the revised tax rate.
3. No GST on Losses: Rule 32(5) safeguards against GST being charged on losses. If a registered dealer sells a used vehicle at a loss, the GST rules ensure no tax liability arises from that transaction.
The 18% GST rate applies solely to registered dealers on the profit margin they earn from reselling vehicles. Private transactions between individuals remain GST-exempt, and no tax is charged when vehicles are sold at a loss. Claims to the contrary are inaccurate and misleading, likely spread with the intent to fuel public discontent.
Also Read: Viral Image of Footballer Ronaldo Offering Namaz in Mecca is AI Generated
This website uses cookies.