GST on used vehicle

[sunil kumar]

Dear Sir,

Iam a registered dealer under GST.May I request your expert advice as under:

If I purchase a repossessed vehicle @ 100000-00( which falls under 12% gst)

PURCHASE PRICE :- 100000-00

EXPENSES ;- 25000-00 (on insurance cover,MV tax,Parking charges to yard,4 tyre, (incld.GST)

Sold the vehicle@ ;- 150000-00

Net Dealer Margin :- 25000-00

Would I have to pay the GST on Dlr Margin i.e on 25000-00 or on the difference of sale price & purchase price 150000 (-)100000 )= 50000

Kindly have your kind advice on the above confusion.

Regards,

Sunil

[KASTURI SETHI]

Margin Scheme in GST

C.B.E. & C. Flyer No. 30, dated 1-1-2018

[KASTURI SETHI]

Dear Querist,

You will pay GST on ₹ 50,000/-

[Ganeshan Kalyani]

In my view, the scheme is applicable to the dealer dealing in second hand vehicle . Are you dealing in Second hand motor vehicle .

[Ganeshan Kalyani]

In my view Notification No. 8/2018 -Central Tax (Rate) dated 25th January, 2018 is applicable to you.

[Ganeshan Kalyani]

If you are not a dealer dealing in second hand vehicle then the Notification referred in my previous reply is applicable.

[sunil kumar]

Dear Sir,

Can I collect refurbishment cost by raising separate invoice to customer against cost of insurance policy, new tyres, parking charges payable to parking yard & transportation charges from yard, after adding nominal services charges.

For example :-

cost of insurance policy 8000-00 (GST payable)

Parking Charges 10000-00 (GST payable)

Cost of 04 tyres 7000-00 (GST payable)

Tpt charges Pertol & driver 3000-00 (Vat payable on petrol)

Gross 28000-00

service charges from customer 2000-00

Do I have to pay the GST on 28000-/ or 2000/- against service charges collectable from customer.

May I request for your kind advice?

Regards,

Sunil

[KASTURI SETHI]

Dear Querist,

First you are requested to reply to the question raised on 2.3.2019 by Sh.Ganeshan Kalyani Ji. Pl. confirm whether you are dealing in Second Hand motor vehicle.

[KASTURI SETHI]

You cannot issue separate invoice. You cannot issue taxable invoice. You are to pay GST from your margin. There is restriction on avaiment of ITC also. Read carefully last two paras of Board's Flyer :-

In case any other value is added by way of repair, refurbishing, reconditioning etc., the same shall also be added to the value of goods and be part of the margin.

If margin scheme is opted for a transaction of second hand goods, the person selling the car to the company shall not issue any taxable invoice and the company purchasing the car shall not claim any ITC.

[Ganeshan Kalyani]

I agree with Sri Kasturi Sir's reply.

[sunil kumar]

Thanx a lot Sir, for your kind advice.

Regards,

Sunil

[sunil kumar]

Dear Ganeshan kalayani Sahab,

We are dealing in second hand motor vehicle,& registered under GST scheme.

Regards,

Sunil

AI Summary

Margin scheme in GST: tax applies to the dealer's margin including refurbishment costs, with ITC restrictions.
GST for second hand motor vehicle dealers under the margin scheme is payable on the dealer's taxable margin - the difference between sale and purchase price - and must include any value added by repair, refurbishing or reconditioning; sellers under the scheme must not issue taxable invoices and purchasers cannot claim input tax credit.