In an upcoming meeting scheduled for October 7, the Goods and Services Tax (GST) Council is set to deliberate on the possibility of reducing the existing 28 percent GST rate on motor vehicles purchased by visually impaired individuals. This decision comes in the wake of a recent judgment by the Madras High Court, which ruled that visually impaired petitioners are entitled to the concessional GST rate when purchasing motor vehicles, according to a source familiar with the matter.
At present, only orthopaedically physically disabled individuals are eligible for a reduced GST rate of 18 percent when acquiring motor vehicles. This preferential rate extends to petrol, liquefied petroleum gas (LPG), or compressed natural gas (CNG) vehicles with engine capacities not exceeding 1,200cc, as well as diesel-powered vehicles with engine capacities not exceeding 1,500cc. In all cases, the lower rate is applicable to motor vehicles with a length not exceeding 4,000 mm.
The 18 percent concessional rate for motor vehicle purchases by orthopaedically disabled persons has been carried over from the pre-GST era. However, the Madras High Court issued a landmark judgment on June 26, 2023, in response to a writ petition filed by Carunia Seelavathi, a visually impaired individual, affirming that such petitioners are indeed eligible for GST concessions when buying a vehicle, similar to what orthopaedically disabled individuals currently enjoy.
In its ruling, the High Court directed the relevant authorities to ensure that the petitioner is exempted from motor vehicle tax and GST within four weeks from the date of receipt of the directive. Subsequently, an appeal was filed before the Madurai bench on September 7, 2023, along with a stay application challenging the judgment. The argument presented was that the decision to provide exemption should be determined by the GST Council, as it constitutes a policy decision.
This issue had previously been deliberated upon during the 47th Meeting of the GST Council. While there was recognition of the merit in the proposal, concerns were raised regarding the potential distortions that could result from tweaking the GST rate structure based on end-use. As an alternative, it was suggested that the benefit or concession to individuals with disabilities should take the form of a reimbursement for the GST already paid. This reimbursement mechanism would be executed through direct transfers funded through the budgetary route by the Department of Empowerment of Persons with Disabilities (DEPwD).
As of now, DEPwD has not formulated any such scheme to implement this reimbursement system, leaving the matter unresolved pending further deliberation by the GST Council.
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