The Goods and Services Tax (GST) rates on old and used vehicles, as per Notification No. 8/2018 -Central Tax (Rate) dated 25th January 2018, vary based on factors such as engine capacity and vehicle type. It’s crucial to understand these rates, especially when Input Tax Credit (ITC) is not availed during the purchase. This article delves into the rates, concessions, and the impact of the margin scheme on GST for old vehicles.

1. GST Rates on Old Vehicles

The GST rates for old vehicles are outlined in the notification, categorizing vehicles based on engine capacity and type. LPG or CNG vehicles with an engine capacity of 1200 cc or more and a length of 4000 mm or more attract an 18% GST rate. Similarly, diesel-driven motor vehicles with an engine capacity of 1500 cc or more and a length of 4000 mm also fall under the 18% GST slab. Sports Utility Vehicles (SUVs) with an engine capacity exceeding 1500 cc have the same GST rate. However, all other old and used vehicles not covered in the mentioned categories are subject to a 12% GST rate.

Rate on old & used vehicle (Notification No. 8/2018 -Central Tax (Rate) dated 25th January, 2018)

S. No.

Chapter, Heading, Sub- heading or Tariff item Description of Goods Rate
1. 8703 LPG or CNG, engine capacity of 1200 cc or more and of length of 4000 mm or more. 18%
2. 8703 Diesel driven motor vehicles of engine capacity of 1500 cc or more and of length of 4000 mm 18%
3 8703 Engine capacity exceeding 1500 cc, popularly known as Sports Utility Vehicles (SUVs) including utility vehicles. 18%
4. 87 All Old and used Vehicles other than those mentioned from S. No. 1 to S.No.3 12%

2. Cess on Old Vehicles

Cess : Old vehicle की बिक्री पर Cess नही लगता है, इसे “notification 01/2018-Compensession (Rate) dated 25th January 2018” द्वारा Nil rate declare किया गया है.

3. Impact of ITC Non-Availability

यह opinion यह मानते हुए दी है कि Vehicle purchase के समय  ITC नही लिया गया है. इसके अलावा उपर बताई गई GST rate margin amount (Sales value-purchase value) पर charge होगी, ना कि sale value पर.

यदि ITC avail कर लिया है तो  उपर बतायी गए notifications की concessional rate का benefit नही मिलेगा और GST भी sales amount पर charge होगा. 

4. Margin Scheme and GST Calculation

Margin scheme {Rule 32(5)} के according, second hand goods का taxable value calculate किया जाता है, जो person second hand goods में deal करता है, उसे केवल margin amount (sale amount less purchase amount) पर GST देना होता है और यदि sale amount, purchase amount से कम है तो इस case में margin amount Nil होगी और कोई भी GST amount charge नही किया जायेगा । Two examples illustrate this:

Example : 1

मान लीजिये आपने 1500 CC से उपर की एक old SUV Car Rs. 8,00,000 में purchase की थी और जिस पर कोई ITC भी avail नही किया है और आपने उस कार को  Rs.8,50,000/- में sale कर दिया ।

तो इस case में आपकी value of supply ,जिस पर GST charge होगा, वो value होगी, Rs.50,000/- (8,50,000-8,00,000).

GST =50,000* 18% = Rs. 9000/-

 Example : 2

मान लीजिये आपने 1500 CC से उपर की एक SUV Car Rs. 8,00,000 में purchase की है, जिस पर कोई ITC भी avail नही किया है और उसके repair & maintenance में Rs.10,000/- का expense कर दिया. फिर आपने उस कार को  Rs.8,50,000/- में sale कर दिया ।

CGST Rules के according, value of supply calculate करने के लिए sale price में से केवल purchase price को less किया जाता है. तो ऐसे case में repair & maintenance के expense को ignore करना है. लेकिन expenses पर जो GST charge हुआ है, उसका ITC मिल जायेगा. जैसे की मान लेते है, Rs.10,000/- के expenses में से Rs.7000/- का expenses registered person के through किया है तो Rs. 7000/- पर जों GST charge हुआ है, उस amount का ITC मिल जायेगा ।

तो इस case में आपकी value of supply ,जिस पर GST charge होगा, वो value होगी, Rs.50,000/- (8,50,000-8,00,000).

GST =50,000* 18% = Rs. 9000/-

Conclusion

Understanding the GST rates on old vehicles is crucial for businesses and individuals dealing in the second-hand vehicle market. The non-availability of ITC at the time of purchase and the application of the margin scheme significantly impact the GST calculation. By exploring these rules and examples, stakeholders can navigate the taxation landscape more effectively, ensuring compliance and informed business decisions.

Reference links :

Notification No. 8/2018 -Central Tax (Rate) dated 25th January, 2018

Notification 01/2018-Compensession (Rate) dated 25th January 2018

Author Bio

Qualification: CA in Practice
Company: STAK & ASSOCIATES
Location: INDORE, Madhya Pradesh, IN
Member Since: 10 Apr 2020 | Total Posts: 10
CA Vikram Tongya, a seasoned Chartered Accountant since 2009, is a distinguished professional in the field of finance and taxation. Currently serving as a partner at STAK & Associates, a reputable firm known for its expertise in financial services, Vikram brings a wealth of experience and insigh View Full Profile

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