CA Nitish Agnihotri

CA Nitish Agnihotri

There has been a drastic change in the GST rate on sale of old and used motor vehicles. Below are the notifications issued on 25th January 2018 for the reference:-

1. Notification No- 8/2018-Central tax (Rate)

2. Similar notification has been issued under the UTGST ACT vide Notification No- 8/2018-Union Territory tax (Rate)

3. Similar notification has been issued under the IGST ACT vide Notification No- 9/2018- Integrated Tax (Rate)

4. Notification No.-1/2018-Compensation Cess (Rate)

As per the above notifications if a person make sale of old and used vehicles, GST rate is to be computed on value that determine the margin of the supplier of the goods, on supply of such goods.

For the purpose of this notifications margin of the supplier is:-

  • In a case of a registered person who has claimed depreciation u/s 32 of Income Tax Act, 1961(43 of 1961) on the said goods, the value that represents the margin of the supplier shall be the difference between the consideration received for the supply of such goods and the depreciation value of such goods on the date of supply, and where the margin of such supply is negative, it shall be ignored; and
  • in any other case, the value that represents the margin of the supplier shall be, the difference between the selling price and the purchase price and where such margin is negative, it shall be ignored.

Nothing contained in the above said notifications shall apply to the suppliers those who have availed input tax credit under CGST Act, 2017 or CCR, 2004 or VAT or any other taxes paid.

A comparison chart of revised rate in case of sale of old and used motor vehicle as per recent notification and the initial notifications is as follows:

S. No. Chapter, Heading, Subheading or Tariff item Description of Goods As per recent notification issued on 25th January 2018 As per old notification issued on 28th June 2017
GST Rate Compensation Cess rate GST Rate Compensation Cess rate
1. 8703 Old and used petrol, LPG and CNG motor vehicles having engine capacity >= 1200 cc and length >= 4000 mm 18% Nil

 

28%

 

15%
2. 8703 Old and used diesel motor vehicles having engine capacity >= 1500 cc and length = 4000 mm 18% Nil

 

28% 15%
3. 8703 Old and used motor vehicles having engine capacity > 1500 cc and length > 4000 mm and ground clearance >= 170 mm (popularly known as SUV) 18%

 

Nil 28% 15%
4. 87 All other old and used vehicles except above 3 12% Nil 28% 1% for petrol and 3% for Diesel

Conclusion:- GST rate on sale of old and used vehicles has been reduced to 12% and 18% (depending on the size of vehicle) from the existing 28% and scrap the cess (varying from 1-15%).

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Category : Goods and Services Tax (8052)
Type : Articles (18224)
Tags : goods and services tax (6503) GST (6104)

18 responses to “Impact of GST on sale of old and used motor vehicles”

  1. shiv Aggarwal says:

    Hi Nitish

    In a company, which value should be considered as WDV either value as per companies act or ass per income tax act?

    Further if it is not possible to calculate individual vehicle WDV as per Income Tax Act due to Block of Asset system. What can we do?

    • SANJAY SHARMA says:

      I am an unregistered GTA. I have sold 2 vehicles worth 30 lakhs to an unregistered individual from a block of 10 vehicles under.

      1. Is Gst applicable.
      2. If no then no problem , if yes then, on what value to collect GST “The vehicles are from a block of asset as per IT. The value of block of vehicles is 60 lakhs.

  2. RAJAN SIVAPRAKASAM says:

    Old Petrol car sold with margin comes under 18% gst or 12% gst. Because if you look at the new notification – petrol vehicle was not mentioned in first 3 items and it falls on Sl no. 4

  3. SANJAY SHARMA says:

    I am fleet based GTA under RCM to an individual, I would like to know if i sold my vehicle purchased for 10 lakhs, wdv 5 lakhs,

    1. at 7 lakhs or at 4 lakhs.

    What will be the applicable GST if any i need to charge (9819253670, 9819253610)

    • F M AKHANI says:

      I SOLD MY TATA TRUCK IN APRIL 2018
      RS 111000 WHICH
      PURCHASED IN 2006 AND WDV AS I TAX IS Rs 15000/ .NOT AVAILED VAT.KINDLY INFORM ME (A) APPLICABLE GST RATE AND
      (B) ON WHICH AMOUNT i e 111000

  4. chitra says:

    Hi Nitish,

    If i am an unregistered person and sell my personal car to a registered person having WDV of Rs. 80 Lacs at a price of Rs. 90 Lacs (Case 1) whether I’ll be required to pay GST on such transaction or not?

    what is the effect if I am happens to be partner of a company which is registered under GST

  5. shreya agarwal says:

    Hi Nitish

    If i am registered gta and sell my capitalized trucks to unregistered person having WDV of INR 5 Lacs at a price of INR 4.5Lacs, whether i will be required to pay GST on sale value or on margin of supply?

  6. Dr. Strange says:

    What is Depreciation Value on the date of supply? Whether it is WDV? If WDV , Whether is IT WDV or Book WDV? If IT WDV how do we compute depreciation upto to the date of supply?

  7. Akhilesh says:

    Good Article .
    An example covering lots of combination may also be posted for better understanding.

  8. Madhukeshwar Hegde says:

    Kindly give clarification about difference between Notification No. 37/2017 Central Tax(Rate) & 8/2018 Central Tax rate

    • NITISH says:

      Both are independent notification. One can use either Notifiaction No-37/2017 Central tax (Rate) or Notification No- 8/2018 Central Tax (Rate).

    • NITISH AGNIHOTRI says:

      Both are independent notification. One can use either Notifiaction No-37/2017 Central tax (Rate) or Notification No- 8/2018 Central Tax (Rate).

  9. sanjay arora says:

    good article

  10. Siddharth Patel says:

    Hi Nitish,

    If i am an unregistered person and sell my personal car to another unregistered person having WDV of Rs. 8 Lacs at a price of Rs. 10 Lacs (Case 1) or Rs 6 Lacs (Case 2), whether I’ll be required to pay GST on such transaction or not?

    Further if the depreciation value to be considered then which WDV would be considered, as per books (Companies Act, 2013) or as per income tax provisions?

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