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GST on Vehicles & Cars in India — Complete Rate Guide 2025

Updated: 3 June 2026

GST on vehicles in India ranges from 5% (electric vehicles) to 50% (large SUVs), with a base rate of 28% plus a compensation cess that varies by vehicle size, engine capacity and fuel type. Electric vehicles carry zero cess and attract only 5% GST.

5%–50%

GST effective rate on vehicles in India. EVs pay just 5% while large SUVs attract 28% GST + 22% cess = 50% total. ITC on car purchases is blocked for most businesses under Section 17(5) of the CGST Act.

GST Rate on Cars and Vehicles — Full Table

The GST Council classifies vehicles into multiple categories based on fuel type, length, engine capacity, and ground clearance. Each category attracts a different rate of GST and compensation cess:

Vehicle Category	GST Rate	Cess	Effective Total	Example
Electric vehicles (4-wheelers)	5%	Nil	5%	Tata Nexon EV, MG ZS EV
Electric two-wheelers / three-wheelers	5%	Nil	5%	Ola S1, Ather 450X
Small petrol cars (<4m length, <1200cc engine)	28%	1%	29%	Maruti Alto, Hyundai Santro
Small diesel cars (<4m length, <1500cc engine)	28%	3%	31%	Maruti Swift Dzire diesel
Mid-size / large petrol cars (>4m or >1200cc)	28%	15%	43%	Honda City, Hyundai i20
Luxury / large diesel cars (>4m, >1500cc)	28%	20%	48%	Toyota Fortuner diesel
SUVs (>4m, >1500cc engine, >170mm ground clearance)	28%	22%	50%	Mahindra Scorpio-N, Tata Safari
Commercial vehicles (trucks, lorries)	28%	Nil	28%	Tata LPT series, Ashok Leyland
Ambulances	12%	Nil	12%	All types
Vehicles for persons with disabilities	5%	Nil	5%	Modified vehicles

ITC on Vehicle Purchases — When Is It Blocked?

Section 17(5) of the CGST Act 2017 specifically blocks Input Tax Credit on motor vehicles for transportation of persons where seating capacity is up to 13 persons (including driver). This means businesses cannot claim ITC on cars, SUVs, or small vans used for:

Employee transportation or executive vehicles
Company-owned cars for staff use
Personal use by directors or partners

However, ITC is available in these specific cases:

Business Activity	ITC Available?	Reason
Car dealership (buying for resale)	Yes	Further supply of the vehicle
Taxi / cab services (Ola, Uber operators)	Yes	Passenger transportation is the core business
Driving schools	Yes	Used for imparting driving training
Goods transport (trucks, delivery vans)	Yes	Transportation of goods — not blocked
General corporate use (company cars)	No	Blocked under Section 17(5)(a)

GST on Electric Vehicles — Special Incentives

The government provides a significant tax advantage for EVs. Beyond the 5% GST rate (vs 28%+ for ICE vehicles), the government also allows GST input credit on EV chargers and charging infrastructure. Interest on loans taken for EV purchase is deductible under Section 80EEB up to ₹1.5 lakh per year under the old tax regime — an additional income tax benefit stacked on top of the lower GST rate.

Frequently Asked Questions

What is GST on car purchase in India?

GST on cars in India ranges from 5% to 50% depending on the vehicle type. Electric vehicles attract the lowest GST at 5% (no cess). Small petrol cars under 4 metres with engine below 1200cc pay 28% GST + 1% compensation cess = 29% effective. Small diesel cars under 4 metres with engine below 1500cc pay 28% + 3% cess = 31%. Mid-size and large petrol cars (above 4 metres or above 1200cc engine) pay 28% + 15% cess = 43%. Luxury large diesel cars pay 28% + 20% cess = 48%. SUVs above 4 metres with engine over 1500cc and ground clearance above 170mm pay 28% + 22% cess = 50%.

Why is GST on electric vehicles only 5%?

The GST Council reduced GST on electric vehicles from 12% to 5% in July 2019 as a deliberate policy measure to promote EV adoption in India and support the FAME (Faster Adoption and Manufacturing of Electric Vehicles) scheme. Electric vehicles have zero tailpipe emissions, and the government wanted to make them cost-competitive with petrol and diesel vehicles. Additionally, EVs carry no compensation cess (unlike ICE vehicles), so the effective GST rate for EVs is just 5% — far below the 29%–50% applicable to conventional vehicles. EV chargers and charging equipment also attract lower GST rates.

Can a business claim ITC (Input Tax Credit) on car purchase?

Generally, no. Section 17(5) of the CGST Act blocks Input Tax Credit on motor vehicles used for transportation of persons with seating capacity of up to 13 persons (including the driver). This means businesses cannot claim ITC on cars purchased for employee transport, executive cars, or company vehicles. However, ITC is available if the car is used: (a) for further supply of such vehicles (car dealers), (b) for transportation of passengers as a business (cab aggregators, taxi services), (c) for imparting driving training (driving schools), or (d) for transportation of goods. Trucks and commercial freight vehicles are not blocked and ITC is fully available.

What is GST on second-hand or used cars?

For used cars sold by a registered dealer, GST applies only on the margin (selling price minus purchase price), not on the full selling price. This margin scheme applies to used vehicles. If the dealer sells at a loss (margin is negative), no GST is payable. The applicable GST rate on the margin follows the same rate applicable to new cars of that category (e.g., 28% + cess for SUVs). If an individual (unregistered person) sells their personal car to another individual, no GST applies — it is a private sale. GST only applies when a registered business is involved in the transaction.

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