Sale of old car

[Subir Bose]

Dear sir,

My partnership firm wants to sell a car purchased in the year 2009 to a unregistered person and also wants to buy a new car. So is gst applicable on sale and itc applucale on puchase of new car?

Subir Bose

[KASTURI SETHI]

GST is payable on sale of old car. ITC is not admissible on purchase of a new car. Read Section 17(5) of CGST Act, 2017.

[Ganeshan Kalyani]

As per IGST Notification No 09/2018 w.e.f. 25/01/18 old and used car is taxable on the written down value of cad minus sale value.

[YAGAY andSUN]

This IGST Notification No 09/2018 w.e.f. 25/01/18 has diluted the judgments of various high court and also the advance ruling of various State VAT Departments.

The moot question is that when you are not allowed to avail ITC at the time of purchase of car (except only in some cases) and how come it is required to pay the tax on sale of car. it is tantamounting to double taxation.

This issue had been raised in various forum but no concrete solution was provided.

AI Summary

GST on sale of used vehicles may be payable while input tax credit is generally ineligible, raising double taxation concerns. GST on sale of used motor vehicles by a business is taxable and must be discharged when a partnership sells a car to an unregistered person. Input tax credit on purchase of a motor vehicle is generally not admissible, so ITC on acquisition of a new car is ordinarily unavailable. An IGST notification treats old cars as taxable on the written down value minus sale value, producing concerns of double taxation where ITC has been disallowed.