Vehicle repair labour is taxed at 18% GST (SAC 9987). After the GST 2.0 reform effective 22 September 2025, most auto parts (HSN 8708) and tyres moved from 28% to a uniform 18% — so a typical repair bill now carries 18% on both labour and parts. When the workshop issues one composite bill with service as the main supply, the whole invoice follows the 18% service rate.
GST Rates — Vehicle Repair Services & Parts
The GST rate for every common repair, service and spare-part line on a workshop invoice, with the HSN/SAC code. Auto-part and tyre rates below reflect the post-22-September-2025 rationalisation.
| Item / Service | HSN / SAC | GST Rate | Notes |
|---|---|---|---|
| Labour / service (repair, maintenance) | SAC 9987 | 18% | Denting, painting, AC service, mechanical |
| Automobile spare parts (general) | HSN 8708 | 18% | 28%→18% under GST 2.0 |
| Tyres (new) & tubes | HSN 4011/4013 | 18% | 28%→18% under GST 2.0 |
| Lead-acid batteries | HSN 8507 | 18% | Car / truck batteries |
| Lithium-ion battery packs (EV) | HSN 8507 60 | 18% | EV battery replacement |
| Engine oils / lubricants | HSN 2710 | 18% | Gear oil, brake fluid, coolant |
| Windshield / safety glass | HSN 7007 | 18% | Laminated or toughened |
| Paint / body-repair materials | HSN 3208 | 18% | Lacquers, enamels, varnishes |
| Composite repair bill (service-led) | SAC 9987 | 18% | Whole invoice at the service rate |
| EV charging service at workshop | SAC 9987 | 18% | EV chargers HSN 8504 @ 18% |
Rates reflect the GST 2.0 two-slab structure effective 22 September 2025 (auto parts & tyres rationalised 28%→18%). Confirm the current line on the official GST portal before invoicing.
Labour vs Parts — Composite or Split Bill?
A workshop can either issue one composite bill (where service is the principal supply, the entire invoice follows the 18% service rate) or a bifurcated bill showing labour and parts on separate lines. Because both labour and most parts are now 18%, the practical GST outcome is usually the same — but correct classification still matters for HSN reporting and ITC.
Composite bill — service-led
- One invoice, service is the principal supply
- Whole bill taxed at the 18% service rate
- Simpler for a routine repair-and-service job
- SAC 9987 drives the classification
Split bill — labour + parts
- Labour line at 18% (SAC 9987)
- Each part at its own HSN — most now 18%
- Correct HSN-wise reporting in GSTR-1
- Useful when a customer supplies own parts
How GST Adds Up — ₹10,000 Service Job
18% Composite service bill
18% Split bill
Before 22 September 2025 most auto parts and tyres were taxed at 28%. On the same ₹6,000 of parts that meant ₹1,680 GST; at the new 18% it is ₹1,080 — a real saving for the customer. Make sure your billing software and quotations use the revised 18% rate and the correct HSN so you are not over-charging or mis-reporting.
Not sure how to classify labour vs parts on your workshop bills?
Get Workshop GST Advice →ITC on Vehicle Repair — Who Can Claim?
Input Tax Credit on motor-vehicle repair and maintenance is blocked under Section 17(5) of the CGST Act when the vehicle is used for personal purposes or general employee commute. It is allowed only for specified business uses — see the ITC blocking rules.
| Who is getting the vehicle repaired | ITC on repair | Reason |
|---|---|---|
| Taxi / cab aggregator / passenger transporter | Yes | Vehicle used to transport passengers |
| Truck / logistics / goods transporter | Yes | Vehicle used to transport goods |
| Car dealer / vehicle manufacturer | Yes | Further supply of vehicles |
| Driving school | Yes | Imparting training on driving |
| Company car for employee commute | No | Blocked — 17(5), personal use |
| Sales representative’s car | No | Not direct transport of goods |
| The workshop on its own tools & inputs | Yes | Business inputs of the service provider |
ITC on the vehicle itself and on its repair follows the same Section 17(5) tests — passenger/goods transport, further supply, and driving-training businesses are the main exceptions.
You can usually claim ITC if
- You run taxis, cabs or a passenger fleet
- You operate trucks or goods vehicles
- You deal in or manufacture vehicles
- You run a driving school
ITC is blocked if
- The car is for personal or director use
- It is a general company car for commuting
- It is a sales team car (not goods transport)
- The vehicle sits outside the 17(5) exceptions
GST on Insurance-Claim Repairs
The GST rate on a repair does not change because an insurer is paying — labour stays 18% and parts follow their HSN. What changes is who the invoice is raised on and therefore who bears the tax.
- In a cashless claim, the workshop bills the insurer, who is the recipient of supply and pays the 18% GST; the owner pays only the deductible.
- In a reimbursement claim, the owner pays the full bill (including GST) first and then claims it back from the insurer.
- GST on health & life insurance became exempt under GST 2.0, but that does not change GST on the repair service itself — motor repair remains taxable at 18%.
GST Registration for Repair Workshops
A vehicle-repair workshop must register once aggregate turnover crosses ₹20 lakh a year (₹10 lakh in special-category states). Because it supplies both a service (labour) and goods (parts), it registers as a regular taxpayer and reports each at its correct HSN/SAC.
- GST registration (GSTIN)
- Correct SAC 9987 on labour
- Correct HSN on each part sold
- Composite vs split-bill decision
- Tax invoice with rate & HSN
- GSTR-1 (outward supplies)
- GSTR-3B (monthly / quarterly)
- ITC only where 17(5) allows
- Insurer-billing reconciliation
- E-invoicing (if applicable)
- Books & stock records
- GSTR-9 annual return
The composition scheme is generally not a fit for a full-service workshop: the ₹50 lakh service-provider composition route bars input credit and inter-state supply, and most workshops that stock parts and bill insurers are better off as regular taxpayers who report labour and goods at their correct HSN/SAC.
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Get GST Registration →Frequently Asked Questions
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