Reduced GST rates on leasing of motor vehicles - IGST notification no. 38/2017

Reduced GST rates on leasing of motor vehicles - IGST notification no. 38/2017 Seeks to prescribe Integrated Tax rate on the leasing of moto

Ankita Khetan

Oct 17, 2017

Last update on Oct 17, 2017

Reduced GST rates on leasing of motor vehicles - IGST notification no. 38/2017

Seeks to prescribe Integrated Tax rate on the leasing of motor vehicles

Government decides to provide relief in GST rates for vehicles purchased, leased prior to GST rollout

GST provides relief in the applicable tax rates for vehicles purchased or leased prior to roll out of GST i.e. 1st July,2017. Itwill attract a tax equivalent to 65% of the current applicable GST rate(including compensation cess) for a period of 3 years. Even the sale of such vehicles(procured the vehicle prior to 1 July 2017) by a registered person and did not/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 (including compensation cess). These rates would apply for a period of three years with effect from 1 July 2017.Hence the effective GST rate(including compensation cess) after the issuance of notification will be

45% on mid-size cars
48% on large cars
50% on sports utility vehicles (SUVs) (which include cars with length exceeding 4,000 mm & having a ground clearance of 170 mm and above)

A similar notification on leasing of motor vehicles has also been passed by Central Government Tax(rate). Click here to view the CGST(rate) notification no.37/2017 dated 13th October ,2017

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY PART II,SECTION 3, SUB-SECTION (i)]

GOVERNMENT OF INDIA MINISTRY OF FINANCE (Department of Revenue)

Notification No. 38/2017- Integrated Tax (Rate)

New Delhi, the 13th October, 2017

G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 5 of theIntegrated Goods and Services Tax Act, 2017 (13 of 2017), the Central Government, on therecommendations of the Council, hereby notifies the integrated tax on inter-State supplies ofgoods, the description of which is specified in column (3) of the Table below, falling underthe tariff item, sub-heading, heading or Chapter as specified in the First Schedule to theCustoms Tariff Act, 1975 (51 of 1975), as the case may be, as specified in the correspondingentry in column (2), of the Table below, at the rate specified in corresponding entry incolumn (4) and subject to relevant conditions annexed to this notification, if any, specified inthe corresponding entry in column (5) of the Table aforesaid: 2. Provided that nothing contained in this notification shall apply on or after 1st July,2020. Explanation For the purposes of this notification, -

(i) Tariff item, sub-heading heading and Chapter shall mean respectively a tariffitem, heading, sub-heading and Chapter as specified in the First Schedule to the CustomsTariff Act, 1975 (51 of 1975).

(ii) The rules for the interpretation of the First Schedule to the said Customs Tariff Act,1975, including the Section and Chapter Notes and the General Explanatory Notes of theFirst Schedule shall, so far as may be, apply to the interpretation of this notification.

[F.No.354/117/2017- TRU (Pt. III)]

(Ruchi Bisht) Under Secretary to Government of India