Sandeep Aggarwal, founder and CEO of Droom, a used car marketplace, said businesses that purchase pre-owned cars as capital assets such as certain ride-hailing companies and e-commerce platforms, will be hit the hardest by the higher tax rates. “In the last few years, due to ride-hailing, quick commerce, and food delivery, automobiles have become a significant asset to make money. For such businesses, buying used cars has now become more expensive,” Aggarwal said.
The tax hike is mainly concerning for the second-hand electric vehicle (EV) segment. While new EVs are taxed at a reduced 5% to encourage adoption, the 18% GST on used EVs may dampen demand in the resale market. Businesses reselling EVs will also face rising operational costs, as repair and maintenance services already attract an 18% GST. Last week, Korean automaker Kia had expressed concerns over the hike in GST on used EVs from 12% to 18%, emphasising that such a move could hinder the Indian automotive industry’s electrification journey.
