New Delhi: Leasing of vehicles purchased prior to 1 July will attract a tax equivalent to 65% of the current applicable goods and services tax (GST) rate for a period of 3 years, the government said on Thursday.
The GST Council, comprising Union finance minister Arun Jaitley and state finance ministers, in its last meeting on 6 October had decided to levy concessional rate for leased vehicle.
“Leasing of vehicles purchased and leased prior to 1 July 2017, would attract GST at a rate equal to 65% of the applicable GST rate (including compensation cess),” the finance ministry said in a statement.
Also such vehicles when sold will attract GST of 65% of the applicable GST (goods and services tax) rate, including compensation cess.
Sale of vehicles by a registered person who had procured the vehicle prior to 1 July 2017 and has not availed any input tax credits of central excise duty, VAT or any other taxes paid on such motor vehicles, will also be subject to 65% of applicable GST rate, it added.
These rates would apply for a period of three years with effect from 1 July 2017. The effective GST rate on mid-size cars will be 45%, and on large cars it would be 48%. The rate will be 50% on sports utility vehicles (SUVs), which include cars with length exceeding 4,000 mm and having a ground clearance of 170 mm and above.