CA Puja Ravindra Vengurlekar

CA Puja Ravindra Vengurlekar

In order to make used cars more affordable, the GST Council announced a reduction in the tax rate on Old used vehicle transactions in its meeting held on January 18, 2017. The tax rate on used old car transactions has been reduced to 18 percent for large cars and SUVs, and 12 percent for small vehicles, from 28 percent (for both categories) earlier. The new rates have come into effect from January 25, 2018.

Government has issued Notification No. 8/2018 Central Tax Rate read with State Tax Rate Notification &  Notification No. 1/2018 Compensation Cess Rate reduced the Rate of GST  & exempted the Cess on old and used vehicle as follows:

Sr. No. Particulars HSN Engine Capacity Length Intrastate Interstate Cess (Rate)
CGST SGST Total IGST
1 Petrol Liquefied petroleum gases (LPG) or compressed natural gas (CNG) driven motor vehicles 8703

 

> 1200 CC > 4000 mm 9% 9% 18% 18% NIL
2 Diesel driven motor vehicles 8703

 

> 1500 CC > 4000 mm 9% 9% 18% 18% NIL
3 Sports Utility Vehicles (SUVs) including utility vehicles 8703

 

> 1500 CC 9% 9% 18% 18% NIL
4 All Old and used Vehicles other than those mentioned from S. No. 1 to S.No.3 87 Others 6% 6% 12% 12% NIL

Valuation of for the purpose of charging GST on supply of such goods will be as follows:

Sr. No. Particulars Margins *  
1 in case of a registered person who has claimed depreciation under section 32 of the Income-Tax Act,1961(43 of 1961) on the said goods Consideration Received (-) Depreciated Value (WDV) # #
2 In any other case Selling Price (-) Purchase Price # #

* Margin for this purpose means that Value on which GST should be charged

## If the difference is positive then charge GST on that Positive difference i.e  Margin Amount

## If the difference is Negative then GST shall be ignored

This notification shall not apply, if the supplier of such goods has availed input tax credit as defined in clause (63) of section 2 of the Central Goods and Services Tax Act, 2017, CENVAT as defined in CENVAT Credit Rules, 2004 or the input tax credit of Value Added Tax or any other taxes paid, on such goods.

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Category : Goods and Services Tax (6660)
Type : Articles (16722)
Tags : goods and services tax (5149) GST (4753)

6 responses to “GST on Sale of Old and used Vehicles”

  1. siddharth says:

    Hi – I have a question and I wonder if you can answer that. My company leased a vehicle from a leasing company and gave it to me to use. As per agreement if I break lease then I have to buy the car. Now the leading company has quoted 28% gst and 20% Cess. Is that right ? The lease started pre gst and leasing company had not claimed imputbcredit on the same

  2. KVR says:

    Please confirm the GST percentage to sale of old goods carrier Mahindra Bolero Pickup

  3. Udaya Chandran says:

    Whether the same is applicable to all the dealers or only to those who deals in second hand goods as in the Margin scheme? Please clarify.

  4. ASHOK KANUNGA says:

    This notification shall not apply, if the supplier of such goods has availed input tax credit as defined in clause (63) of section 2 of the Central Goods and Services Tax Act, 2017, CENVAT as defined in CENVAT Credit Rules, 2004 or the input tax credit of Value Added Tax or any other taxes paid, on such goods.

    WHAT IS THE TAXATION ON SALE OF OLD VEHICLE ON WHICH SUPPLIER TAKEN INPUT TAX CREDIT

  5. Aman Jain says:

    Would like to know, if this view would apply even to those registered assessees who are not in the business of supplying used cars?

    Because, FAQs issued by CBEC highlight that the benefit of margin scheme will extend only to those assessees who are in the business of supplying used cars.

    Thanks

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