GST Council To Discuss Key Tax Proposals, Including EV Resale Tax Hike And Food Delivery Tax Cut

The Goods and Services Tax (GST) Council is set to meet on 20-21 December in Jaisalmer, Rajasthan, where it will deliberate on several crucial tax proposals, including some potential hikes and some reductions.

One of the major items on the agenda is a recommendation from the GST Council’s Fitment Committee to increase the GST rate on used EVs from the current 12 per cent to 18 per cent.

This proposed hike would align the tax rate on second-hand electric vehicles with that of larger petrol, diesel, and sports utility vehicles (SUVs), which are taxed at 18 per cent. Currently, used EVs are taxed at a concessional rate of 12 per cent, based on the supplier’s margin.

This keeps the effective tax relatively low, making used EVs more attractive in the resale market. However, if the rate increase is approved, the resale market for used EVs could face challenges, as the higher tax rate may discourage potential buyers.

Additionally, parts and services for the repair and maintenance of second-hand vehicles already attract an 18 per cent GST, which increases operational costs in the used vehicle market.

Another significant topic for discussion is a potential tax cut on food delivery services. Reports indicate that the GST Council may lower the tax on food delivery charges by e-commerce platforms from 18 per cent to 5 per cent, effective from January 1, 2024.

This tax reduction would apply to platforms like Zomato and Swiggy, which have been under scrutiny for their high tax rates on food delivery services. However, the new proposal would prevent these platforms from claiming tax credits, a move that could affect their operational costs.