Importing Used Car to India – Procedure, Guidelines, Tax – Full Guide

This article was last updated and fact checked on October 9, 2024 by Mani Karthik.

Thinking about importing a used car into India? Well, buckle up because it’s not as straightforward as it seems. India has a ton of rules and regulations around car imports, especially used ones.

But don’t worry—I’ve broken down the process into simple steps so you can get your dream car home without pulling your hair out. From understanding the procedure to figuring out the taxes, here’s everything you need to know.

1. Can You Import a Used Car to India?

Yes, you can import a used car into India. However, there are some strict guidelines you must follow.

For instance, the car must meet specific age, environmental, and manufacturing standards to even be considered for import.

Key Requirements:

• The car must be right-hand drive: Yep, just like the ones in India. Left-hand drive cars won’t be allowed.
• The car must not be older than 3 years: The manufacture date needs to be within 3 years of the import date.
• The car must be new to India: This means it shouldn’t have been sold or registered in India before.
• Compliance with emission standards: The car should comply with Indian emission regulations, similar to Bharat Stage VI standards.

Tip: Make sure the car has a speedometer showing km/h, not mph!

2. Procedure for Importing a Used Car to India

The import process is quite detailed, and if any step is missed, it could cause a lot of headaches. Here’s a step-by-step breakdown:

Step 1: Check Eligibility

Before anything, confirm that your used car meets all the import eligibility criteria mentioned above. If it doesn’t, customs will reject it upon arrival, and you could end up paying huge fines or, worse, lose the car.

Step 2: Hire a Customs Agent

It’s a good idea to hire a licensed Customs House Agent (CHA) who can guide you through the process. They are familiar with the paperwork and procedures, making your life a lot easier.

Step 3: Pay the Import Duties and Taxes

Importing cars to India is expensive due to high import duties. You’ll need to pay Customs Duty, GST, Compensation Cess, and Additional Duties based on the car’s value.

Step 4: Obtain Import Licenses

If you’re not a returning NRI, you’ll need to get an import license from the Directorate General of Foreign Trade (DGFT). Returning NRIs can bring in one used car under Transfer of Residence without an import license, but the car must still meet other guidelines.

Step 5: Ship the Car

Once the paperwork and payments are sorted, you can go ahead and ship the car. You’ll need to provide your CHA with all the documents for customs clearance, such as the Bill of Lading, Invoice, Insurance, and the Manufacturer’s Date of Manufacture Certificate.

Step 6: Customs Clearance and Registration

When the car arrives at the Indian port, customs will inspect the car and review the paperwork. Once cleared, the car will be registered with the Regional Transport Office (RTO), where you’ll receive the registration number and roadworthiness certificate.

3. Documentation Required

Here’s a checklist of all the documents you’ll need to import a used car:

• Bill of Lading: This proves ownership and is issued by the shipping company.
• Original Invoice: Showing the purchase price of the car.
• Manufacturing Date Certificate: Proving the car is not older than three years.
• Customs Declaration Form: Required for clearance.
• Insurance Document: For the car’s transit and coverage.
• Pollution Under Control (PUC) Certificate: Ensures compliance with emission norms.
• No Objection Certificate (NOC): From the original registering authority, if applicable.
• Passport and Proof of Residence: For NRIs importing the car.

Tip: Keep multiple copies of each document. You never know when customs or the RTO might ask for an extra copy.

4. Taxation and Import Duties

This is where things get a little heavy on your pocket. The total import duty on a used car can range from 100% to 125% of the car’s value. Here’s how it’s broken down:

Import Duty Breakdown:

• Basic Customs Duty (BCD): 60%
• GST: 28%
• Compensation Cess: Ranges between 15% to 20% depending on engine size.
• Additional Duties: Can vary depending on the car’s origin and value.

So, for example, if the car costs ₹10 lakh, you could end up paying ₹10-12 lakh in duties and taxes on top of that.

5. Are There Any Exemptions?

If you’re an NRI returning to India, you may be eligible for some duty relief under the Transfer of Residence scheme, which allows you to import one used car without a full import license.

However, you still have to pay all the duties and taxes, and the car must still meet the other eligibility criteria.

6. Customs Inspection Process

Once the car arrives at the port, the customs department will perform a thorough inspection to ensure everything is in order. This includes checking the car’s age, engine specifications, and whether it meets India’s emission norms.

Any discrepancies here can lead to fines, penalties, or even confiscation of the vehicle. So it’s crucial to ensure all the paperwork is accurate and complete.

Summary Checklist for Importing a Used Car:

1. Eligibility Check: Make sure the car is right-hand drive, less than 3 years old, and complies with Indian standards.
2. Hire a Customs Agent: To handle the process.
3. Pay Import Duties: Prepare for a hefty import duty of up to 125%.
4. Obtain Import Licenses: Required for non-NRIs or if it’s not under Transfer of Residence.
5. Documentation: Ensure all required documents are prepared and in order.
6. Customs Inspection: Be ready for a detailed inspection at the port.

Final Thoughts

Importing a used car to India is no small feat, especially with the complex regulations and high taxes involved. However, if you follow the guidelines and work with a good customs agent, it can be done smoothly.

Just make sure your car meets the eligibility criteria, have all your documents in order, and be prepared to pay those hefty duties!

For official details and updates, you can always check the DGFT website or the Indian Customs website.