Rising GST: Old Cars, EVs, and Cigarettes to Face Higher Tax Rates in Upcoming GST Council Review

New Delhi (The Uttam Hindu): The 55th GST Council meeting, likely to be held in the dunes of Jaisalmer on December 21, will discuss a hike in GST rate for old cars, secondhand electric vehicles, as well as tobacco products — the latter including cigarettes among them. There are prospects that the GST on those products will be increased to 7%, and, therefore, the rate of cigarettes and tobacco will be 35%. The GST on vehicles may also go up from the current 12% to 18%, which will cause second-hand cars to go up in price. That decision by the council directly affects consumers, as there will be a rise in vehicle prices and tobacco will cost more.

The GST Fitment Committee has proposed a rise in GST on old cars and EVs. Presently, most old cars are being charged at 12% GST. Once implemented, it would bring the cost of used cars up. The compensation cess on SUVs stands at 22%, which also includes the clarification of the same cess yet to be implemented. Other tax-related proposals will be expected to be discussed by the council, including lowering the GST rates on premiums paid for life and health insurance; raising tax rates on luxury goods like wristwatches, shoes, and clothing; and the imposition of a 35% tax on hazardous products.

Furthermore, a proposal to reduce the GST rate on food delivery platforms like Swiggy and Zomato is under consideration, where the rate may be reduced from 18% (with input tax credit) to 5% (without input tax credit).