If you are a small or medium business owner or a startup founder in India, you need to be aware of the Goods and Services Tax (GST) and how it affects your business. GST is a comprehensive tax levied on all goods and services in India. It was implemented on July 1, 2017, and has replaced all other indirect taxes such as Central Excise, Service Tax, VAT, and others.
The automobile industry is one of the largest industries in India, and the implementation of GST has had a significant impact on it. Before GST, the automobile industry was subject to different taxes such as excise duty, VAT, and local taxes. The GST regime has simplified the tax structure and has led to a reduction in the tax burden on the automobile industry.
However, the GST rates for motor vehicles have increased from the previous tax regime. Under GST, motor vehicles are classified under the HSN code 8702. Let us take a closer look at the GST rates and HSN code for motor vehicles.
Motor vehicles are classified under the HSN code 8702, and the GST rates for motor vehicles depend on their engine capacity and fuel type. The GST rates for motor vehicles are as follows:
Motor vehicle typeEngine capacityFuel typeGST rateFour-wheelersUp to 1200ccPetrol28%Four-wheelersUp to 1200ccDiesel28%Four-wheelers1201cc to 1500ccPetrol28%Four-wheelers1201cc to 1500ccDiesel28%Four-wheelersAbove 1500ccPetrol28%Four-wheelersAbove 1500ccDiesel28%Electric vehiclesN/AN/A5%Two-wheelersUp to 350ccN/A28%Two-wheelersAbove 350ccN/A28%
It is important to note that the GST rates for motor vehicles are higher than the previous tax regime. Under the previous tax regime, the tax rate for small cars was around 12.5%, and the tax rate for luxury cars was around 55%. However, under GST, the tax rate for all motor vehicles is 28%.
The GST rates for motor vehicles have led to a significant increase in the prices of cars and other vehicles. This has affected the automobile industry as well as small and medium businesses and startup owners who rely on motor vehicles for their business operations.
In conclusion, the GST rates and HSN code for motor vehicles, air and non-air-conditioned, have a significant impact on the automobile industry and small and medium businesses and startup owners in India. While GST has simplified the tax structure, the higher tax rates have led to an increase in the prices of motor vehicles. As a small and medium business owner or startup founder, it is important to be aware of the GST rates and HSN code for motor vehicles and how they affect your business.
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