Sale of Second hand car

[Naina Chowdary]

Dear Sir/Mam,

I bought a car by paying VAT under installment basis scheme provided by the org I am working in. The car is reg under the org name. As i left the org, now i want to buy the same from my org . The org has availed the dep on it. They are Ready to sell the car at WDV.

Now the sale is an Inter State sale. But while paying installments i paid VAT. Is GST applicable?

[KASTURI SETHI]

Payment made after 1.7.17 is liable to GST.

[DR.MARIAPPAN GOVINDARAJAN]

GST is applicable as ascertained by Shri Sethi.

[YAGAY andSUN]

Big Relief on Sale of Old and Used Vehicles:

Government by issuing the Notification No. 8/2018 Central Tax Rate read with state Tax Notification, reduced the Rate of GST on old and used vehicle as follows:

1. GST-18% on 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.

2. GST-18% on Old and used, diesel driven motor vehicles of engine capacity of 1500 cc or more and of length of 4000 mm

3. GST-18% on Old and used motor vehicles of engine capacity exceeding 1500 cc, popularly known as Sports Utility Vehicles (SUVs) including utility vehicles.

4. GST-12% on All Old and used Vehicles other than those mentioned from S. No. 1 to S.No.3

Note: Government also Exempted the Cess applicable on sale of Used vehicle through Notification No. 1/2018 Compensation Cess Rate.

Valuation of Old or Used car for GST Calculation

Value on which GST at above rates to be calculated shall be Margin of Supply which is to be calculated in the manner as mentioned in Notification which is given below:

1. In Case Depreciation under Income Tax Act Availed: Margin of supply shall be difference between Sale consideration and Written down Value and tax to be calculated on such Margin, and where the margin of such supply is negative, it shall be ignored.

2. In other cases: Margin of Supply shall be difference between sale price and purchase price Tax to be calculated on such Margin, and where the margin of such supply is negative, it shall be ignored;

AI Summary

GST applicability on sale of used vehicles: tax applies and valuation follows margin of supply method. Sale of a second hand vehicle by an employer to an employee is a taxable supply under GST despite prior VAT paid; inter state character does not exclude GST. Valuation uses the Margin of Supply: if depreciation was claimed, margin = sale consideration minus Written Down Value; otherwise margin = sale price minus purchase price; tax applies only to a positive margin. Applicable GST rates vary by vehicle engine and class and compensation cess on used vehicle sales is exempted.