CA Himanshu Singh

After the implementation of GST sale of used and old vehicles were taxed at the same rate as applicable on new vehicles which was 28% + Applicable cess which was up to 15%, and due to this effective  tax on sale of old vehicles was upto 43%. This higher rate of tax was causing the burden on trade and industry and due to this there was slow down in the used vehicle market.

Big Relief on Sale of Old and Used Vehicles:

Government by issuing the Notification No. 8/2018 Central Tax Rate read with state Tax Notification, reduced the Rate of GST on old and used vehicle as follows:

1. GST-18% on Old and used, petrol Liquefied petroleum gases (LPG) or compressed natural gas (CNG) driven motor vehicles of engine capacity of 1200 cc or more and of length of 4000 mm or more.

2. GST-18% on Old and used, diesel driven motor vehicles of engine capacity of 1500 cc or more and of length of 4000 mm

3. GST-18% on Old and used motor vehicles of engine capacity exceeding 1500 cc, popularly known as Sports Utility Vehicles (SUVs) including utility vehicles.

4. GST-12% on All Old and used Vehicles other than those mentioned from S. No. 1 to S.No.3

Note: Government also Exempted the Cess applicable on sale of Used vehicle through Notification No. 1/2018 Compensation Cess Rate.

Valuation of Old or Used car for GST Calculation

Value on which GST at above rates to be calculated shall be Margin of Supply which is to be calculated in the manner as mentioned in Notification which is given below:

1. In Case Depreciation under Income Tax Act Availed: Margin of supply shall be difference between Sale consideration and Written down Value and tax to be calculated on such Margin,  and where the margin of such supply is negative, it shall be ignored.

2. In other cases: Margin of Supply shall be difference between sale price and purchase price Tax to be calculated on such Margin,  and where the margin of such supply is negative, it shall be ignored;

(Author can be reached at mr.himanshu@icai.org)

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9 responses to “GST on sale of old and used vehicles reduced”

  1. ASGEPL says:

    We are winding up our business of Consultancy Services and our annual turnover will not be exceed 15 Lakhs in next 2 years ? We therefore planning to surrender the GST No within this F.Y 2017-18.

    Can we sell the company owned car next year after surrendering GST No.?

  2. Raman says:

    Company used white board Car(Maruthi Estilo below 1200cc)
    year of purchase 2011, selling on 22.3.2017 without margin exchanged for new car with Maruti true value
    @ Rs 1.65Lacs, shall we ignore GST? please clarify.

  3. amar says:

    Dear Sir/Madam
    I have a old bus(Purchase before July 2017) contain more than 13 seater in our company . And our management want to sale it. So please tell me what is HSN code for this and the GST Rate need to levied on the sale invoice.

  4. suresh Jain says:

    our Audi Car(In the name our company) have damaged in total loss in an accident. Insurance company have sold the car @ 700000 to one individual and remaining 1300000 is reimbursed by insurance company. our book value after taking depreciation is 2000000 equal to both. if there is any GST liability on our company

  5. S K Mishra says:

    Whether Notification No. 8/2018 -Central Tax( Rate ) Dated 25-01-2018 superceed Notification No.37/2017 Central Tax (Rate) Dtd.13-10-17, since nothing is mentioned in Notification No. 8/2018 -Central Tax.

    Notification No.37/2017 Central Tax (Rate) Dtd.13-10-17 still holds good inrespect of Vehicle purchased prior to 01-07-2017 & GST is payable @65% of normal rate.

  6. Ashok Kumar Kanunga says:

    Sir,

    Given below the details of sold vehicle, and kindly clarify the GST Liability of the same.

    Model of the Vehicle

    Purchase Value – – – — 56521

    Date of Purchase – – – — 13.04.2013

    VAT% — – — — 14.50%

    Sold at – – — -15000/-

    Bajaj Discount 125CC Self Strart

    What is Tax Liability under GST???

  7. DAMODAR TRADELINKS says:

    DEAR SIR
    WE ARE SOLD ONE OLD CAR AT RS 100000
    IF RCM IS LIABLE WHAT THE TAX RATE WILL BE

    AND IS IT RELATED TO GSTR 1- OR 2

  8. swaroop says:

    in case margin is negetive, it shall be ignored. What it means? No needs to levy tax and negative sign has to be ignored

  9. VENKATRAJA BHAT says:

    Slight confusing. As per Notification No.37/2017 Dtd.13-10-17, under Sl. No. 2, HSN Code 87, Motor Vehicles (Used) attracting 65% of applicable tax rate, subject to condition no.2. But as per latest above notification tax rate also reduced and tax only calculated on margin amount instead of whole amount. Second Notification beneficial to tax payer. But what is the need of first notification except Sl. No. 1 (Leasing of Vehicles)?

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