New Delhi: The recent decision by the GST Council to impose an 18% tax on the resale value of used electric vehicles (EVs) has sent shockwaves through the industry, leaving many potential buyers and sellers confused and concerned. However, experts clarify that the tax will only be levied on the profit margin of businesses involved in the resale of EVs, not on individuals selling their personal vehicles.
The matter of contention started when the Finance Minister, Nirmala Sitharaman, stated that the GST Council had agreed to the imposition of an 18% tax on the resale value of used EVs, which is an increase from the last 12%. The minister explained that the tax would be imposed on the “margin value,” which, in turn, is the difference between the initial purchase price and the resale price. On the other hand, people misread this and erroneously thought that individuals selling their personal EVs would be the ones subject to tax, which led to a lot of misunderstanding and worries.
As far as this matter is concerned, GST expert Abhishek Rastogi talked on it, stating that the tax imposition would be only on the enterprises that are dealing with the resale of EVs and not the individuals. “If an individual buys an EV for ₹18 lakhs and sells it to a friend or relative for ₹13 lakhs, no GST will be levied,” Rastogi said. Early on, for instance, an example could be taken like this: if a dealer acquires an EV for ₹13 lakhs and then sells it for ₹17 lakhs, the GST shall be laid on the profit margin of ₹4 lakhs at 18%.
The move, on the other hand, holds assurance because it could have a dramatic effect on the second-hand EV market, the one that is going to grow very quickly in the next few years. Since the tax on resale value has risen to 18% from 12%, more and more dealers will be forced to act this way, and consequently, reselling EVs will become costly. This situation can further worsen the problems that have already existed for the consumers interested in buying electric vehicles (EVs). In addition, this was a blow to the promotion and adoption effort.
Disappointingly, the government move has been viewed sceptically by many, who are feeling that the ln is open at an ease, and electric vehicle (EV) market expansion is suspended due to the additional tax. Thus, the imposed tax on resale value will create the worry that the used electric vehicles will be costlier and will thus be less acceptable and less attractive to the buyers, said the industry expert. Further, this will just burden the way in which EVs can be adopted, and this will be more difficult for the government to reach their electric vehicle goals well.
In the end, even if the enactment of the GST Council on putting an 18% tax on the resale of used EVs has caused worry and lack of understanding, it is of utmost importance to grasp that the tax will solely apply to “enterprise dealers,” not to individuals in this case. Not to mention, the action is very likely;
to bring serious ramifications not just to second-hand EVs and the purchasing of EVs in India but also to other issues in the country.
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