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GST on sale of old Vehicles ( From 1.1.17 till date)

Introduction: 

GST on sale of old vehicles/ cars is discussed at length from beginning till date.After the implementation of GST on 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. On 13th Oct, 2017 Some Relief on Sale of Old and Used Vehicles was provided to industries via Notification No. 37/2017 – Central Tax (Rate) dated 13th October, 2017 .

Notification No. 37/2017 gives big relief to the assessee who are in the business of leasing of old vehicle. This notification provides the much awaited abatement on valuation of lease of old motor vehicles. It gives abetment of 35% of value i.e. In other words, Applicable GST Tax Rate will be levied on only on 65% of the consideration. But the benefits of this notification is only upto 1st July 2020 subject to fulfilment of below conditions:

1. The Motor Vehicles was purchased by lessor prior to 1st July, 2017 and supplied on lease before 1 st July, 2017.

2. The supplier of Motor Vehicle is a registered person.

3. Such Supplier had purchased the Motor Vehicle prior to 1st July, 2017 and has not availed input tax credit of Central Excise Duty, Value Added Tax or any other taxes paid on such vehicles.

Himanshu - shaifaly.ca@gmail.com - Gmail 2019-05-22 18-13-02

 

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*In general the above table would be applicable to registered dealers like traders, manufacturers, etc. who sell Motor Vehicles used in their business which have been purchased in Pre GST Regime but sold during the GST Regime.

Big relief for GST on sale of old vehicles:

On 25th Jan, 2018 Government gives Big Relief on Sale of Old and Used Vehicles via Notification No. 8/2018 – Central Tax (Rate) and Notification No. 1/2018 – Compensation Cess (Rate) dated 25th January 2018.

To make old/used Motor Vehicle more affordable, on recommendation of GST Council, Government has issued above notifications on 25thJanuary 2018. These notifications are in effect from 25th January 2018. These Notifications shall not apply, if the supplier of such goods has availed input tax credit as section 2(63) of the CGST Act, 2017, CENVAT as defined in CENVAT Credit Rules, 2004 or the input tax credit of VAT or any other taxes paid, on such goods.
Notification No. 1/2018 – Compensation Cess (Rate): Government exempt the cess on sale of old/used Motor Vehicles.
Notification No. 8/2018 – Central Tax (Rate): Government reduced the GST Tax Rate on sale of old/used Motor Vehicles.

What is the rate of GST on sale of used motor vehicles/cars ?

You can use this list for rate of tax on sale of used/old motor car/vehicle. 

GST on sale of old vehicles

GST on sale of old vehicles

What is the valuation for levy of GST on sale of old/used motor car/vehicle?

 

Now the question will arise about valuation i.e. what shall be the value on which GST shall be applicable
As per the above notification, Value of Supply shall be the “Margin of Supply”.
Margin of Supply means:-
1. If Depreciation Claimed u/s 32 of Income Tax Act 1961:- Where the depreciation has been claimed under section 32 of Income Tax Act 1961 on the said goods, Margin of Supply shall be difference between Sale consideration received for supply of such goods and depreciated value of such goods on the date of supply, and where the margin of such supply is negative, it shall be ignored.
2. In Other Case: – Margin of Supply shall be the difference between the selling price and the purchase price and where such margin is negative, it shall be ignored.

Summarised provisions for GST on sale of old vehicles /cars

Here a summary of all provisions till now is compiled. It will be quite useful for you. 

GST on sale of old vehicles

GST on sale of old vehicles

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