GST on Automobiles — Cars, EVs, Two-Wheelers & Cess
Complete guide to GST on automobiles: car taxation with compensation cess (29%-50%), electric vehicles at 5%, two-wheelers, spare parts, used car margin scheme, ITC restrictions, and dealer billing structure.
GST rates were revised in September 2025, and the rates on this page have not yet been checked by a tax professional against that revision. Confirm the current rate in the CBIC rate notifications before you invoice.
28%+1%
Small Cars (<4m)
28%+17%
Mid-Size Cars
28%+22%
SUVs (>4m,>1500cc)
5%
Electric Vehicles
28%
Two-Wheelers
28%
Spare Parts
28%
Tyres
12%/18%
Used Cars
GST Framework for Automobiles
Cars & SUVs — 28% + Cess
All motor vehicles (passenger cars, SUVs, luxury cars) attract the highest GST slab of 28% PLUS compensation cess. Cess varies: 1% for small cars (<1200cc, <4m), 3% for small diesel cars (<1500cc, <4m), 17% for mid-size cars, 20% for large cars (>1500cc), and 22% for SUVs (>4m length, >1500cc, ground clearance >170mm).
Electric Vehicles — 5% (No Cess)
In a landmark decision (2019), the GST Council reduced EV rate from 12% to 5% with NO compensation cess. EV chargers also at 5%. This makes India's EV taxation among the lowest globally. Applies to: electric cars, electric buses, e-rickshaws, electric two-wheelers, and hybrid vehicles (only pure EVs qualify for 5%).
Two-Wheelers — 28% (>350cc)
Two-wheelers above 350cc engine capacity attract 28% GST (luxury category). Motorcycles/scooters ≤350cc attract 28% without cess. The industry has been demanding a reduction to 18% for sub-250cc bikes (mass-market), but the Council has not yet revised this rate. E-two-wheelers enjoy 5%.
Auto Components & Spares
Automobile spare parts, accessories, and components attract 28% GST. This includes: engines, gearboxes, axles, brakes, body panels, filters, batteries (lead-acid 28%, lithium-ion 18%), and lubricants. The high rate on spares has been a concern for the aftermarket industry and vehicle maintenance costs.
Used/Second-Hand Vehicles
Sale of used vehicles by registered dealers (not individuals): GST on margin (selling price minus purchase price). Rate: 12% for vehicles ≤1200cc/≤1500cc diesel AND ≤4m. 18% for others (SUVs, luxury). If margin is negative, no GST. Individuals selling personal vehicles: NOT liable for GST.
Dealer Margins & ITC Chain
Auto manufacturers collect 28% + cess from dealers. Dealers charge same to end customers. Full ITC available in the supply chain (manufacturer → dealer → sub-dealer). End consumers bear the final tax. Company-owned vehicles: ITC blocked under Section 17(5) unless used for further taxable supply (cab operators, driving schools).
Automobile GST + Cess Rate Table
| Vehicle Type | HSN | GST | Cess | Total |
|---|---|---|---|---|
| Small petrol car (<1200cc, <4m) | 8703 | 28% | 1% | 29% |
| Small diesel car (<1500cc, <4m) | 8703 | 28% | 3% | 31% |
| Mid-size car (>4m, <1500cc) | 8703 | 28% | 17% | 45% |
| Large car (>1500cc) | 8703 | 28% | 20% | 48% |
| SUV (>4m, >1500cc, >170mm GC) | 8703 | 28% | 22% | 50% |
| Electric vehicles (all) | 8703 | 5% | 0% | 5% |
| Two-wheeler (≤350cc) | 8711 | 28% | 0% | 28% |
| Two-wheeler (>350cc) | 8711 | 28% | 3% | 31% |
| Commercial trucks/buses | 8704/8702 | 28% | 0% | 28% |
| Three-wheelers/auto-rickshaw | 8703 | 28% | 0% | 28% |
| Tractors | 8701 | 12% | 0% | 12% |
| Spare parts & accessories | 8708 | 28% | 0% | 28% |
Frequently Asked Questions
What is the total GST on cars in India?
Why are electric vehicles taxed at only 5%?
Can businesses claim ITC on cars purchased?
How is GST calculated on used/second-hand cars?
Auto Dealer GST — End-to-End Automated
Laabam.One handles automobile invoicing with cess calculation, HSN-based rate lookup, used car margin scheme, ITC reversal for blocked credits, and multi-location dealer compliance.
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