Leasing of vehicles purchased prior to July 1 will attract a tax equivalent to 65 per cent of the current applicable GST rate for a period of 3 years, the government said today.

The GST Council, comprising Union Finance Minister Arun Jaitley and state finance ministers, in its last meeting on October 6 had decided to levy concessional rate for leased vehicle.

The GST Council, comprising Union Finance Minister Arun Jaitley and state finance ministers, in its last meeting on October 6 had decided to levy concessional rate for leased vehicle.

"Leasing of vehicles purchased and leased prior to July 1, 2017, would attract GST at a rate equal to 65 per cent of the applicable GST rate (including Compensation Cess)," the finance ministry said in a statement.

Also such vehicles when sold will attract GST of 65 per cent of the applicable GST (Goods and Services Tax) rate, including compensation cess.

Sale of vehicles by a registered person who had procured the vehicle prior to July 1, 2017 and has not availed any input tax credits of central excise duty, VAT or any other taxes paid on such motor vehicles, will also be subject to 65 per cent of applicable GST rate, it added.

These rates would apply for a period of three years with effect from 1st July, 2017.

The effective GST rate on mid-size cars will be 45 per cent, and on large cars it would be 48 per cent.

The rate will be 50 per cent on sports utility vehicles (SUVs), which include cars with length exceeding 4,000 mm and having a ground clearance of 170 mm and above.