The GST council has lowered the tax rates on vehicles purchased and leased to a record 65 percent of the applicable GST rates even including compensation cess. Overall the calculation has shown that the rates of GST will now be reduced from 43 percent to a substantial 28 percent now. This decision comes out to be a big relief for such companies who purchase vehicles and leases them out. All the decisions in which the relief provided to the existing or old vehicles leases of motor vehicles were taken in the recent 22nd GST council held on 6 October.
The major decisions taken were, Leasing of vehicles purchased and leased prior to July 1, 2017 would attract GST at a rate equal to 65 percent of the applicable GST rate (including compensation cess); Such vehicles when sold shall attract GST of 65 percent of the applicable GST rate (including compensation cess); Sale of vehicles by a registered person who had procured the vehicle prior to July 1 and has not availed any input tax credits of central excise duty, VAT or any other taxes paid on such motor vehicles, would also be subject to 65 percent of applicable GST rate (including compensation cess).
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In the release of statement and decisions, it was mentioned that these rates would be applicable for a term of three years starting July 1. MS Mani, Partner-GST, Deloitte India, stated that “while the reduced effective rate of 65 percent (of the applicable GST + compensation cess rate) is welcome, it still falls short of the industry’s expectations as this is significantly higher than the erstwhile rates.”
