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Leased Vehicles: Government Provides Clarity On GST Rate

Leasing of vehicles purchased prior to July 1 will attract a tax equivalent to 65 percent of the current applicable Goods and Services Tax rate for a period of 3 years, the government said on Thursday.

The GST Council, comprising Union Finance Minister Arun Jaitley and state finance ministers, in its last meeting on October 6 had decided to levy concessional rate for leased vehicle.

Also such vehicles when sold will attract a tax of 65 percent of the applicable GST rate, including compensation cess.

Sale of vehicles by a registered person who had procured the vehicle prior to July 1, 2017 and 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 percent of applicable GST rate, it added.

These rates would apply for a period of three years with effect from July 1, 2017.

The effective GST rate will be 45 percent for mid-sized cars and 48 percent on large cars. The rate will be 50 percent on sports utility vehicles (SUVs), which include cars with length exceeding 4,000 mm and having a ground clearance of 170 mm and above.

. Read more on GST by BloombergQuint.