The GST landscape for all goods and services has undergone significant changes. It simplifies tax compliance for buyers and sellers. The Indian used car market has also been reformed with the recent tax shift. For anyone looking to buy or sell a second-hand car in 2025, understanding the new GST slab is necessary. The 56th GST council meeting, which took place on September 3, 2025, was a big deal. It made reforms that will affect the whole car industry, even the used car market.

This blog post goes over the most important changes to the GST and what they entail for people who buy or sell used cars.

The Big Picture: Key Updates from the 56th GST Council Meeting 

The 56th GST council meeting aimed to simplify the GST structure and make it more citizen-centric. One of the most important results was the merging of the former four-tiered GST slab system into a simpler two-rate structure. For essential commodities, there is a “merit rate” of 5%, and for most other things, there is a “standard rate” of 18%. There was also a 40% demerit rate for premium products.

Important Updates for Cars

The GST council has cut taxes on small cars to 18% from 28%. Starting on September 22, 2025, this holiday gift will make entry-level rides cheaper, even as luxury automobiles have a high new 40% tax. How? To learn more, read this blog all the way through.

• The GST rate for petrol and petrol hybrid cars, LPG, and CNG cars (≤1200 cc and ≤4000 mm) has gone down from 28% to 18%.
• The GST rate for diesel and diesel hybrid cars (≤1500 cc and ≤4000 mm) decreased from 28% to 18%.
• The GST rate for luxury cars and larger hybrids (those that are bigger than small cars) gets increased from 28% to 40%.

Cars that are popular with the general public aren’t the only ones that are affordable. Cars that are longer than 4 meters or have engines larger than 1500cc will also be cheaper. This will help cars like the Hyundai Creta, Kia Seltos, Tata Harrier, Mahindra XUV700, and Mahindra Scorpio N.

In the past, these cars would have had a 50% tax, which included a 22% compensatory cess. The GST changes got rid of the cess part completely; therefore, these cars will now be taxed at a flat rate of 40%.    

Electric Vehicles Stay at 5%

It’s interesting that nothing changes in the world of electric vehicles. All electric cars, two-wheelers, and three-wheelers still get the 5% GST discount, which makes them the best tax-friendly way to get around. There is currently no clear price restriction for premium EVs, and the band is still at 5%. 

Reference link: The Economic Times

GST on Second-Hand Car in 2025

The tax rules for secondhand cars have also been changed, mostly to make the system clearer and easier to understand. This is what you need to know:

A Uniform Rate for Dealers:

GST is charged on the registered dealers. The dealer can use the margin scheme in which they have to pay GST on the profit margin only when selling a car. 

Individual Dealing 

GST is only applicable to businesses involved in trading goods and services. If you are an individual and selling a car to another individual then GST is not applicable. 

Through Online Platform 

In this case also, if you are a registered dealer, then it comes under GST. Still, peer-to-peer deals through any online platform are exempt from GST. 

GST says that selling old or used cars (resale of cars) is a taxable activity. It’s important to remember that if two people sell anything to each other privately, they don’t have to pay GST.

These are the important changes done by the GST council. Now you can sell your car to any individual with the best online platform. 

How the HaloTrades Platform Improves Your Used Car Selling Experience 

As the news stated, if you are an owner of the car and selling your car to another individual, then no GST applies. Whether you are selling your used car personally or through an online platform like HaloTrades, your car is completely exempt from GST tax. 

So take the leverage from the best online used car platform in India. Here we share some important services that you can take by paying a minimal amount. These services save your time and help you in getting a fair and faster deal. 

Expert Evaluation: 

Certified professionals that know exactly what to look for, from engine health to hidden damage, undertake the inspections.

Get Reports: 

Get complete, independent reports that show you the real condition of the car, without the seller’s opinion.

Easy and hassle-free: 

Buyers can rapidly make smart choices without having to do their own thorough checks, and sellers can get serious buyers by giving them verifiable reports.

Increases Self-Esteem:

 If you’re selling, getting an inspection done makes buyers trust you more and helps you close the transaction faster.

Find Problems That Are Hidden:

Find warning signs that vendors might not tell you about, such as missed service appointments, repairs that keep happening, or mileage that doesn’t match up.

Trust in how well the car works: 

A consistent service record shows that you are a conscientious owner and minimizes the chance of your car breaking down unexpectedly.

Adds Value for Both the Buyer and the Seller: 

A documented service history gives purchasers peace of mind and makes their transaction safer. For sellers, it makes them look more trustworthy and helps them conclude deals faster, generally at a higher price.

These services are helpful for both buyers and sellers. We at HaloTrades are not just focused on selling used cars; we give equal importance to both parties and believe in complete transparency and trust. So buy and sell used cars online with us. 

Also read: 5 Reasons Why Halo Trades Is Better Than Classified Platforms

The bottom line

The new GST rules, especially those from the 56th GST Council meeting, are a good step toward making India’s car industry more open and easy to understand. At first look, the adjustments may seem complicated, but they are meant to help consumers in the long term. You can buy a second-hand car in 2025 through the HaloTrades platform with more confidence if you know about these rules. To know more, visit our website or directly contact us.

FAQs

Q: What are the latest GST updates for used cars in 2025?

Under the Margin Scheme, the GST on used cars for licensed dealers is now a flat 18% that only applies to the profit margin. There is no GST for individuals selling to other individuals.

Q: Has GST on used cars increased in 2025?

Under a simpler approach, the GST on a dealer’s profit margin is now always 18%. For people who are selling their cars, the GST stays at 0%, so it hasn’t gone up for them.

Q: Are electric cars affected by the 2025 GST changes?

No, the recent modifications don’t affect electric cars. They still have a 5% GST rate, which makes them the best choice for taxes.