In GST, margin scheme has been provided in case of sale of second hand motor vehicles. In this scheme, a person supplying old and used vehicles is liable to pay GST on the profit margin at the time of sale of such vehicles. Basic condition to avail this scheme is that the person supplying such vehicles had not claimed input tax credits under GST or under CENVAT Credit rules or VAT in any State VAT law at the time of purchase of these vehicles.
Government has provided this scheme to every registered person w.e.f. 25.01.2018 through relevant notifications under CGST and IGST acts. Earlier, this scheme was limited to only those dealers who were dealing in sale and purchase of old vehicles.
As per CGST notification CGST-R-8/2018 and IGST notification IGST-R-9/2018 dtd 25.01.2018, every registered person supplying following specified goods will be liable to pay GST on the value that represents margin of the supplier on supply of such goods.
|
S. No. |
HSN Code |
Description of Goods |
Rate |
|
1. |
8703 |
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. Explanation. – For the purposes of this entry, the specification of the motor vehicle shall be determined as per the Motor Vehicles Act, 1988 (59 of 1988) and the rules made there under. |
9% |
|
2. |
8703 |
Old and used, diesel driven motor vehicles of engine capacity of 1500 cc or more and of length of 4000 mm
Explanation. – For the purposes of this entry, the specification of the motor vehicle shall be determined as per the Motor Vehicles Act, 1988 (59 of 1988) and the rules made there under. |
9% |
|
3 |
8703 |
Old and used motor vehicles of engine capacity exceeding 1500 cc, popularly known as Sports Utility Vehicles (SUVs) including utility vehicles. Explanation. – For the purposes of this entry, SUV includes a motor vehicle of length exceeding 4000 mm and having ground clearance of 170 mm. and above. |
9% |
|
4. |
87 |
All Old and used Vehicles other than those mentioned from S. No. 1 to S.No.3 |
6% |
Further, GST Compensation Cess rate schedule also amended to exempt fully from GST Compensation Cess on such supplies.
Determination of value of Margin :-
Value of margin to be determined in following manner:-
- 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, the value that represents the margin of the supplier shall be the difference between the consideration received for supply of such goods and the depreciated 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 supplier shall be, the difference between the selling price and the purchase price and where such margin is negative, it shall be ignored.
Position from 01.07.2017 to 12.10.2017 for the vehicles originally purchased before 01.07.2017
In case, any ‘old and used’ motor vehicle sold during the period from 01.07.2017 to 12.10.2017, GST is leviable on full sale price at applicable rate as prescribed in GST Tax Rate Schedules plus Compensation Cess.
Position from 13.10.2017 to 24.01.2018 for the vehicles originally purchased before 01.07.2017
In case, any ‘old and used’ motor vehicle sold during the period from 13.10.2017 to 24.01.2018, GST is leviable on full sale price at 65% of applicable rate as prescribed in GST Tax Rate Schedules plus 65% of applicable rate of Compensation Cess.
Basic condition to charge 65% tax is that the person supplying such vehicles had not claimed input tax credits under CENVAT Credit rules or VAT in any State VAT law at the time of purchase of these vehicles.
Position from 01.07.2017 to 24.01.2018 for the vehicles originally purchased post GST
Where ITC not claimed:-
In case, any ‘old and used’ motor vehicle sold during the period from 01.07.2017 to 24.01.2018, GST is leviable on full sale price at applicable rate as prescribed in GST Tax Rate Schedules plus Compensation Cess.
Where ITC Claimed under GST:-
In this case, provisions of Section 18(6) of CGST Act would be applicable.
As per section 18(6), In case of supply of capital goods or plant and machinery, on which input tax credit has been taken, the registered person shall pay an amount equal to the input tax credit taken on the said capital goods or plant and machinery reduced by “five percentage points for every quarter or part thereof” or the tax on the transaction value of such capital goods or plant and machinery determined under section 15, whichever is higher.
sir,
We want to sell our old vehicle, The vehicle is registered at our Delhi address but we have not the GST No. of Delhi, Delhi is our Head office but our works in UP. Our GST No. is available of UP, Please Suggest can we charged the GST amount or not.
Regards
Kuldeep Kansal
9899573040
GST on sale of old vehicles is chargeable only at the amount of ‘Profit Margin’ (not at the whole amount of vehicle). Meaning of Profit Margin is given in above article.
If there is some profit margin on this transaction, you have to charge GST.
Please note, if you are selling this vehicle from Delhi office, you have to apply for registration under GST before selling vehicle.
Sir,
Which depreciated value to be consider for calculation of margin under income tax act/ companies act?
If we want to sell our old and used car.
Depreciated value to be considered as per Section 32 of Income Tax Act 1961
A company is in production of soaps and detergents. It sold it’s old vehicle which was used by the top management. Car was sold in an auction. They have charged GST at 9% (4.5+4.5).
My doubt is that, Selling of second hand cars is not their business, so, is it required to deduct tax in such cases?
Selling of second hand car is a supply under Section 7 of CGST Act 2017. Therefore, there is requirement to pay GST on this transaction subject to the condition there is some value of supply within the meaning of GST provisions as discussed in this article. Check the transaction time and then find the relevant provision applicable to this transaction in article.
Dear All,
We are from the ready mix concrete business. we would like to sold our old/used transition mixture. the book value of the mixture say 10 Lac and we have sold at 9 Lac. what will be the GST rate on 9 Lac.
Ji Can We get a User Car, lenth wise, HSN Code with Tax %
Sir,
Car dealer purchase and sale 2nd hand car on commission basis so what is HSN Code and GST rate please give detail if u have any invoice format kindly send.