Looking for expert help with Income tax and GST for auto spare parts and tyre shop owners India? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant. End-to-end filings, notices, and deadline tracking, all in one place.
Key Takeaways
- Car, bike, bus and truck parts, tyres, tubes, batteries, spark plugs, headlamps, bearings, filters and engine oil are all 18% GST from 22 September 2025 (Notification 9/2025-Central Tax (Rate), Schedule II).
- Tractor parts named in the notification, tractor tyres and tubes, and bicycle parts and tyres are 5%. A tractor battery or bearing is not on that list and stays at 18%.
- A free warranty replacement you make for the manufacturer carries no GST. A pro-rata amount the customer pays does.
- Garages and fleet owners buying from you want a tax invoice. That makes the composition scheme a poor fit for most parts shops.
- Under Section 44AD, deemed profit is 6% of digital receipts and 8% of cash. Moving cash sales to UPI lowers the figure.
What is the GST rate on auto spare parts in India? From 22 September 2025, parts and accessories of cars, buses and trucks (HSN 8708) and of motorcycles and scooters (8714) attract 18% GST under Schedule II of Notification 9/2025-Central Tax (Rate). Tyres, batteries and engine oil are also 18%. Specified tractor parts and tractor tyres are 5% under Schedule I.
A spare parts counter handles thousands of small items, and most of them now sit at one rate. That makes the billing software simple until a farmer walks in for a tractor clutch plate, or a customer comes back with a battery that failed in month 14. Those two cases cause most of the GST errors we see in parts shops. The income tax side has its own question: whether to use Section 44AD's deemed profit or your books. This guide covers both for AY 2026-27. If you also do repair work, read our income tax guide for auto mechanics and garage owners.
What GST rate applies to what you sell?
Comparison
GST Rates for Auto Spare Parts and Tyre Shop Items (from 22 September 2025)
| Item | HSN | GST rate |
|---|---|---|
| Parts and accessories of cars, buses, trucks | 8708 | 18% |
| Parts and accessories of motorcycles and scooters | 8714 | 18% |
| New tyres (cars, bikes, trucks, buses) | 4011 | 18% |
| Retreaded and used tyres, tyre flaps | 4012 | 18% |
| Inner tubes (other than cycle and tractor) | 4013 | 18% |
| Batteries | 8507 | 18% |
| Spark plugs, starter motors, alternators, ignition coils | 8511 | 18% |
| Headlamps, indicators, wipers | 8512 | 18% |
| Ball and roller bearings | 8482 | 18% |
| Engine parts (pistons, rings, valves) | 8409 | 18% |
| Oil, air and fuel filters | 8421 | 18% |
| Engine oil and lubricants | 2710 / 3403 | 18% |
| Specified tractor parts (see list below) | 8708 | 5% |
| Tractor tyres and tractor tyre tubes | 4011 / 4013 | 5% |
| Hydraulic pumps for tractors | 8413 81 90 | 5% |
| Bicycle parts, bicycle tyres and tubes | 8714 / 4011 / 4013 | 5% |
Source: Notification 9/2025-Central Tax (Rate), Schedule II S. No. 29, 68, 137, 138, 139, 396, 410, 467, 480, 484, 485, 544, 547; Schedule I S. No. 269, 271, 272, 273, 426, 443 to 454, 458
Within your state you charge 9% CGST plus 9% SGST; to another state, 18% IGST. Stock that a supplier invoiced before 22 September 2025 keeps the input tax credit (ITC) at whatever rate the supplier charged. Your sale today goes out at the current rate.
Which tractor parts are 5%?
This is where rural parts shops go wrong in both directions. Schedule I doesn't say "all tractor parts". It names them:
Step-by-Step Guide
Tractor Items at 5% GST (Schedule I)
Body and structure
Rear wheel rim, centre housing, transmission housing, front axle support, bumpers, fenders, hood, wrapper, grill, side panels, extension plates, fuel tank and their parts (S. No. 443, 444, 454).
Drive and braking
Brake assembly, gear box, transaxle, clutch assembly, steering wheel and their parts; road wheels and their parts (S. No. 445 to 448, 451, 452).
Engine cooling and exhaust
Radiator assembly, engine cooling system, silencer assembly and their parts (S. No. 449, 450).
Hydraulics
Hydraulics and their parts (S. No. 453), and hydraulic pumps for tractors (S. No. 426).
Tyres and tubes
Tractor tyres, rear tractor tyres and tubes for tractor tyres (S. No. 269, 271, 273).
Source: Notification 9/2025-Central Tax (Rate), Schedule I
Say a farmer buys a tractor clutch assembly for Rs 4,000. At 5% the GST is Rs 200. Bill it at 18% out of habit and the farmer pays Rs 720, Rs 520 more tax than the law asks for.
The reverse mistake is billing a tractor battery at 5% because it's "for a tractor". Batteries (8507), bearings (8482), filters (8421), spark plugs and starters (8511) and lamps (8512) have their own headings in Schedule II. They're 18% whatever vehicle they go into. Set up the 5% tractor items as separate codes in your billing software so the counter staff don't have to decide each time.
Warranty claims on batteries and tyres
Battery and tyre shops handle more warranty returns than most retailers. The Central Board of Indirect Taxes and Customs (CBIC) set out the rules in Circular 195/07/2023-GST and extended them from parts to whole products in Circular 216/10/2024-GST:
- Free replacement for the customer: no GST, as long as the customer pays nothing.
- Pro-rata replacement: if the customer pays part of the price of the new battery, GST applies to what they pay. A battery whose warranty covers 60% and the customer pays Rs 2,000 means GST on the Rs 2,000.
- You bill the manufacturer for the unit you gave out: issue a tax invoice and pay GST on it. The manufacturer takes the credit, and you don't reverse your ITC.
- The manufacturer issues you a credit note instead: it can adjust its tax only once you've reversed the ITC you took on the replaced unit.
That last case is the one to watch. If a battery company's credit note lands in your GSTR-2B and your ITC is still sitting there, your books and the company's won't agree.
When do you need GST registration?
If you only sell goods, registration is required once aggregate turnover crosses Rs 40 lakh in most states. Telangana and several other states kept the Rs 20 lakh limit (Notification 10/2019-Central Tax). A Hyderabad parts shop selling Rs 25 lakh a year must register. Selling to a buyer in another state needs registration from the first rupee (Section 24(i), CGST Act). Our GST registration service can set this up for you.
Regular scheme or composition?
Under the composition scheme, a trader pays 1% of turnover (Rule 7, CGST Rules), up to Rs 1.5 crore a year. You can't charge GST, can't claim ITC and can't sell to other states (Section 10(2)(c), CGST Act). You issue a bill of supply, not a tax invoice.
For most parts shops that ends the discussion. Your regular buyers are garages, fleet owners, transporters and workshops. They're registered and want a tax invoice so they can claim the 18%. A composition dealer can't give one. On the numbers alone, composition only helps where GST on your stock and rent is below about 14.25% of GST-inclusive sales (18/118 minus 1%), which means a margin well above what most parts counters earn. See our composition scheme guide for the other conditions.
How is your income taxed for AY 2026-27?
Section 44AD lets a resident individual, HUF or partnership firm (not an LLP) declare a deemed profit instead of keeping full books. The limit is Rs 2 crore of turnover, or Rs 3 crore where cash receipts are within 5% of total receipts. The deemed profit is 6% of receipts by UPI, card or bank and 8% of cash receipts. You can declare more than this. Declaring less brings in the lock-in and audit rules below.
Example 1 (Rs 90 lakh turnover, new regime): Rs 70 lakh comes by UPI and bank, Rs 20 lakh in cash.
- Deemed profit: 6% of Rs 70 lakh (Rs 4,20,000) plus 8% of Rs 20 lakh (Rs 1,60,000), so Rs 5,80,000.
- Tax: 5% of Rs 1,80,000 (the part above Rs 4 lakh), so Rs 9,000.
- The Section 87A rebate covers income up to Rs 12 lakh. Tax payable: nil, assuming no other income.
Example 2 (Rs 2.5 crore turnover, new regime): Cash receipts are Rs 7 lakh (2.8%), so the Rs 3 crore limit applies. The other Rs 2.43 crore is digital.
- Deemed profit: 6% of Rs 2.43 crore (Rs 14,58,000) plus 8% of Rs 7 lakh (Rs 56,000), so Rs 15,14,000.
- Tax: Rs 20,000 + Rs 40,000 on the slabs up to Rs 12 lakh, plus 15% of Rs 3,14,000 (Rs 47,100). Total Rs 1,07,100. No 87A rebate above Rs 12 lakh. Add 4% cess of Rs 4,284. Tax payable: Rs 1,11,384.
If the same shop's cash had been Rs 20 lakh (8%), the Rs 3 crore limit wouldn't apply. At Rs 2.5 crore it would be outside Section 44AD altogether and would need books and a tax audit.
Step-by-Step Guide
Before You Declare Less Than the Section 44AD Figure
Check the last five years
If you declared under Section 44AD in any of them, going below it now bars you from Section 44AD for the next five assessment years (Section 44AD(4)).
Check the audit trigger
Under that bar, if your income is above the basic exemption limit you must keep books and get a tax audit (Sections 44AD(5) and 44AB(e)).
Check the turnover audit limit
Filing on books above Rs 1 crore turnover needs an audit under Section 44AB, unless cash receipts and cash payments are each within 5%, which raises the limit to Rs 10 crore.
Make sure the books support the figure
Your GST returns and bank statements show your sales. A declared profit well below what they imply has to be backed by proper accounts.
File the right form
ITR-4 for Section 44AD if total income is within Rs 50 lakh and other conditions are met; ITR-3 if you file on books.
Source: Sections 44AA, 44AB, 44AD and 87A, Income-tax Act 1961; Finance Act 2025
See our Section 44AD guide and old vs new regime guide.
Common mistakes parts and tyre shops make
- Billing every tractor item at 5%. Only the listed parts, tractor tyres and tubes, and tractor hydraulic pumps are 5%. Batteries, bearings and filters are 18%.
- Billing listed tractor parts at 18%. The farmer overpays, and your GSTR-1 shows the wrong rate.
- Charging no GST on a pro-rata warranty payment. Only a fully free replacement is outside GST.
- Keeping ITC on a unit the manufacturer has credited. Reverse it, or the credit note won't reconcile.
- Taking Rs 2 lakh or more in cash from one customer for one bill or one day. A set of truck tyres can cross this. It breaks Section 269ST, and the penalty under Section 271DA equals the cash received. See our cash transaction limits guide.
How Tax Garden helps parts and tyre dealers
We file GSTR-1 and GSTR-3B for spare parts and tyre shops, with tractor items at the right rate and warranty invoices, company credit notes and ITC reversals matched every month. See our GST return filing service. We also prepare your ITR and check whether Section 44AD or books suits your real margin; see our ITR filing service and pricing. For vehicle rates, see our GST guide to cars and vehicles.
