The car gst rate now depends on engine size and length: petrol, LPG and CNG cars up to 1,200 cc and 4,000 mm, and diesel cars up to 1,500 cc and 4,000 mm, pay 18%, while bigger cars and SUVs pay 40%. Electric cars pay 5%. Before 22 September every car paid 28% plus a compensation cess of up to 22%, so the reform cut the total tax on almost every model.
This page explains the limits, hybrids, commercial vehicles, used car sales and car servicing, with an example of the old and new tax. It is the hub for vehicles, with links to two-wheelers, auto parts, tyres and more.
Cars: codes and GST rates
Item / HSN / GST- Petrol, LPG or CNG car up to 1,200 cc and 4,000 mm18%Small car entry
- Diesel car up to 1,500 cc and 4,000 mm18%Small diesel entry
- Petrol hybrid up to 1,200 cc and 4,000 mm18%Mild and strong hybrids
- Diesel hybrid up to 1,500 cc and 4,000 mm18%Within the same limits
- Cars above these limits, SUVs, luxury cars40%No compensation cess now
- Electric cars5%Run only on battery power
- Three wheelers18%Auto rickshaws
- Buses for 10 or more persons18%Including school buses
- Goods vehicles, trucks, pick ups18%Commercial vehicles
- Car servicing and repair18%SAC 998714
Quick facts
HSN heading
8703: motor cars for transport of personsSmall cars
18% (9% CGST + 9% SGST)Big cars
40%, with compensation cess removedElectric cars
5%Rate before the reform
28% plus cess of 1% to 22%Commercial vehicles
8704 at 18%
Car gst rate list after the reform
| Car type | HSN | GST now | Before |
|---|---|---|---|
| Small petrol, LPG or CNG (up to 1,200 cc, up to 4,000 mm) | 8703 | 18% | 28% plus 1% cess |
| Small diesel (up to 1,500 cc, up to 4,000 mm) | 8703 | 18% | 28% plus 3% cess |
| Mid size and bigger cars | 8703 | 40% | 28% plus 15% to 20% cess |
| SUVs above 1,500 cc and 4,000 mm | 8703 | 40% | 28% plus 22% cess |
| Petrol or diesel hybrids within the small car limits | 8703 40, 8703 50 | 18% | 28% plus cess |
| Hybrids above those limits | 8703 40, 8703 50 | 40% | 28% plus cess |
| Electric cars | 8703 80 | 5% | 5% |
Both limits apply together. A petrol car of 1,197 cc that is 4,100 mm long is above the length limit and pays 40%. The engine size and length are taken as specified under the Motor Vehicles Act, 1988 and its rules.
Gst on cars above 10 lakhs
The GST rate does not depend on price. A car costing more than Rs 10 lakh still pays 18% if it is within the small car limits, and a cheaper car above the limits pays 40%. Income tax rules may require the dealer to collect TCS on cars sold above Rs 10 lakh; that is not GST.
Gst cut on cars: worked example
A small petrol car with a taxable value of Rs 6,00,000. Before the reform: GST 28% Rs 1,68,000 plus cess 1% Rs 6,000, total tax Rs 1,74,000. Now: GST 18% Rs 1,08,000, no cess. A large SUV with a taxable value of Rs 20,00,000: before, 28% plus 22% cess, Rs 10,00,000 tax; now 40%, Rs 8,00,000.
GST on EV cars
Electrically operated vehicles that run only on battery power, including electric cars, e-scooters, e-rickshaws and e-bicycles, are 5%. Chargers for EVs are also 5%. Hybrids that have a petrol or diesel engine are not EVs for this entry.
Commercial vehicle gst rate
Goods vehicles under 8704 (trucks, tippers, pick ups, small goods carriers) are 18%. Buses and vans for 10 or more persons under 8702 are 18%. Ambulances fitted with the required equipment are 18%. Tractors are 5%, covered on the tractor page.
Gst on car service and car parts
Car servicing and repair are services under SAC 998714 at 18%. Parts and accessories of cars under 8708 are 18% (they were 28% for many parts). When a workshop bills parts and labour separately, each line is taxed at 18%. See auto parts and engine oil.
Gst on sale of old car
A person selling a personal car is not supplying in the course of business, so no GST arises. A registered business selling a used car it owned charges GST, and dealers in used cars can pay tax only on their margin under a special valuation rule. The rate on used vehicles was also revised in the reform; check the current entry before quoting it.
Car rates above are a general reading of the current schedules, which set limits on engine size and length that must be checked model by model. Confirm the entry and vehicle specifications on the GST portal, and ask a GST practitioner or chartered accountant before buying or selling vehicles in business.
Frequently asked questions
Which GST slab applies to a new car?
Small petrol, LPG and CNG cars up to 1,200 cc and 4,000 mm, and small diesel cars up to 1,500 cc and 4,000 mm, pay 18%. Others pay 40%. Electric cars pay 5%.
Is compensation cess still charged on cars?
No. Cars now pay only GST at 18% or 40%, without compensation cess.
What is the car hsn code?
Passenger cars are 8703. Electric cars are 8703 80.
What is the GST on car service?
Car servicing and repair are taxed at 18% under SAC 998714.
How much GST do trucks and buses attract?
Trucks and goods vehicles under 8704 and buses under 8702 are taxed at 18%.