The long-standing fiscal concession provided under the Goods
and Services Tax (GST) regime for persons with orthopaedic physical disability
(PwOPD) on the purchase of certain motor vehicles has been discontinued.
This significant decision, formalized by the Ministry of Heavy Industries
(MHI), comes into effect immediately following a clarification from the Ministry
of Finance (MoF) in October 2025.
This move effectively scraps the specialized GST concession
certificate and brings the tax rate for these small vehicles to a uniform
18% for all buyers, sparking concern among disability rights advocates and
the affected community.
The Core Change: From Concession to Uniformity
Prior to this decision, the scheme, administered by the MHI
through the GST Exemption Certificate Scheme (GECS), aimed to reduce the
financial burden on disabled individuals by providing a substantial GST
concession.
|
Previous Regime (Pre-Oct 2025) |
Current Regime (Post-Oct 2025) |
|
Standard GST Rate on small cars: 28% + Cess (up to 45%) |
Uniform GST Rate on small cars: 18% |
|
Concessional Rate for PwOPD: 18% GST (with 0% Cess) |
Rate for PwOPD: 18% GST (same as general public) |
|
MHI issued a GST Concession Certificate (GECS) to
PwOPD. |
MHI has stopped issuing GECS certificates. |
The Rationale for Discontinuation
The discontinuation is rooted in the streamlining of GST
rates for specific vehicle segments, as clarified by the Ministry of
Finance, Department of Revenue (TRU), through an Office Memorandum dated
September 29, 2025.
- Uniform
Rate for Small Cars:
The Ministry of Finance clarified that small motor vehicles—specifically,
those with a length not exceeding 4000 mm and engine capacity not
exceeding 1200cc (petrol/CNG) or 1500cc (diesel)—are now uniformly
taxed at 18% GST.
- Elimination
of Differential Benefit: Since the GST rate for these specific small cars is now
18% for the general public, the original purpose of issuing a
certificate to grant a concessional 18% rate to PwOPD is deemed redundant.
- MHI’s
Decision:
In light of this clarification, the MHI issued a Notice on October 8,
2025, deciding to cease the issuance of the GST concession certificate for
orthopaedically disabled persons, as the effective tax rate is now the
same for all purchasers of the eligible vehicles.
Impact on the Disabled Community
While the reduction of the GST rate for small cars to 18%
benefits the general public, for the orthopaedically disabled community, this
change is viewed as a withdrawal of an essential social welfare measure.
v Loss of Positive Discrimination: The concession was not merely a fiscal
adjustment but an act of positive discrimination aimed at reducing the
cost of modified vehicles necessary for mobility and independence. By making
the tax rate uniform, the government has eliminated the financial advantage
previously afforded to this disadvantaged segment.
v The Burden on Mobility: For many PwOPD, the financial relief
was a critical factor in affording an "Adapted Vehicle." Scrapping
the concession, even with a lower base rate for all, imposes an additional
cost burden on a population that already faces higher living expenses due
to disability.
v Discrimination Against Other
Disabilities:
This issue further highlights the existing discrimination in the GST framework,
which historically offered the concession only to those with orthopaedic
physical disability, excluding other major categories of persons with
disabilities (PwDs) like the visually impaired or those with hearing
impairment, a point that has been a subject of previous litigation.
High Court Intervention
The decision has already faced judicial scrutiny. The Delhi
High Court has taken strong exception to the notification, seeking a clear
rationale from the Central government. The Court questioned why a corresponding
decrease in the GST rate could not be implemented for the differently-abled
persons, maintaining the principle of proportionality and social
justice. The court's reaction suggests that the final word on this policy
change may still be pending.
What This Means for Buyers
v No New Certificates: The MHI will not process any new
applications for the GST concession certificate under GECS.
v Uniform 18% Rate: Purchasers of eligible small cars
(under 4000 mm in length and specific engine capacities) will pay 18% GST,
irrespective of their disability status.
v Focus on Advocacy: PwDs and their representative bodies
are now compelled to advocate for a further reduction in the GST rate for their
category to ensure that the spirit of the original concession is upheld,
possibly through a new notification or amendment.
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