The relaunch of the Tata Sierra has generated strong interest among Indian car buyers, especially with expectations of both ICE and electric variants. Along with design and features, buyers should clearly understand how recent GST rules and existing tax structures affect the final cost and tax benefits of purchasing the new Tata Sierra.
This article explains the tax implications on buying the new tata sierra after GST changes, including GST rates, income tax impact, EV benefits, and what buyers gain or lose from a tax perspective.
Table of Contents
GST Structure on Cars After Recent Changes
Under the current GST framework, passenger vehicles continue to attract high indirect taxes, and no major relief has been extended to petrol or diesel cars.
For ICE (petrol/diesel) Tata Sierra:
- GST rate remains 28%
- Compensation cess ranges up to 22%, based on engine capacity and body type
- Total indirect tax burden can reach 48–50% of the ex-showroom price
Despite industry demands, the government has clarified that cars remain in the highest GST slab, as they are classified as non-essential or luxury items.
GST on Tata Sierra Electric Variant
Electric vehicles continue to enjoy favourable GST treatment even after GST changes.
For Tata Sierra EV:
- GST rate is 5%
- Compensation cess is nil
This makes the electric variant significantly cheaper compared to petrol or diesel versions and improves affordability over the long term.
Input Tax Credit (ITC) Rules After GST Changes
GST law continues to block ITC on passenger vehicles, even after recent clarifications.
ITC is not available if Tata Sierra is purchased for:
- Office use
- Director or employee use
- General business travel
ITC is allowed only when the vehicle is used for:
- Passenger transportation business
- Driving schools
- Vehicle resale or leasing businesses
For most individual buyers and businesses, GST paid becomes a cost.
Income Tax Impact for Individual Buyers
For salaried or personal-use buyers:
- No income tax deduction on car purchase cost
- No deduction for car loan principal
- Interest on car loan is also not deductible
GST changes do not alter income tax treatment for personal vehicles.
Business and Professional Tax Benefits
If Tata Sierra is purchased for business or professional use, income tax benefits are still available.
Depreciation Benefits
- Petrol/Diesel vehicle: 15% depreciation
- Electric vehicle: 40% depreciation
Higher depreciation on EVs makes Tata Sierra EV more tax-efficient for businesses.
Car Loan Interest
Interest paid on a business-use car loan remains fully deductible as a business expense.
Section 80EEB Benefit for EV Buyers
Under current rules, individuals purchasing an electric Tata Sierra using a loan may claim:
- Deduction up to ₹1.5 lakh on interest paid
- Available under Section 80EEB, subject to conditions
This benefit remains unaffected by GST changes and improves post-tax savings for EV buyers.
Road Tax and State-Level Changes
Many states continue to offer:
- Reduced road tax
- Registration fee waivers
- Additional EV incentives
Petrol and diesel vehicles do not receive such benefits, increasing the cost gap after GST.
Benefits of Buying Tata Sierra After GST Changes
- EV variant enjoys low GST and higher depreciation
- No increase in GST burden beyond existing rates
- Business users can still claim depreciation and interest
- EV buyers benefit from income tax and state incentives
- Long-term running costs remain lower for EVs
Drawbacks and Cost Concerns
- High GST and cess on petrol and diesel variants remain unchanged
- No GST input credit for most buyers
- Limited income tax benefits for personal buyers
- Rising insurance and compliance costs
GST changes have not eased the tax burden on conventional cars.
Capital Gains Tax on Sale
- Personal vehicles usually do not attract capital gains tax due to depreciation
- Business vehicles are taxed based on written-down value at the time of sale
GST changes do not impact resale taxation.
Should Buyers Wait for Further GST Relief?
Currently, there is no indication of GST reduction on petrol or diesel cars. Buyers considering the Tata Sierra should not delay purchase expecting immediate tax relief.
However, EV buyers continue to enjoy strong tax advantages under both GST and income tax laws.
Final Takeaway from TaxGiveIndia
After GST changes, the tax structure clearly favours electric vehicles over petrol and diesel cars. The new Tata Sierra, especially in its EV form, offers meaningful tax advantages for both individuals and businesses.
Buyers should evaluate:
- Usage (personal or business)
- Fuel type
- Long-term tax savings
before finalising the purchase.
TaxGiveIndia.com helps taxpayers understand tax implications clearly, ensuring informed decisions on high-value purchases like vehicles.