GST on Used Cars

[Ethirajan Parthasarathy]

A company sells a used car in Jan 2020 after claiming depreciation u/s 32 of Income Tax Act 1961. They have to pay GST on surplus over WDV realized by such sale. In IT records, depreciation has been claimed upto 31/03/2019. Should they calculate proportionate depreciation upto 31/12/2019 for arriving at surplus ??

There is no provision under Income Tax Act for proportionate claim of depreciation upto date of sale. Please clarify.

[PAWAN KUMAR]

As per my view, income tax act specify time limit of six months for claiming depreciation. Therefore in your case six months have passed, you may select full rate of depreciation fifty percent extent.

AI Summary

Depreciation timing: where the prescribed six month claim period has lapsed, full depreciation rate may be applied for GST surplus calculation. The Income Tax Act permits a time limit for claiming depreciation; where the statutory six month period for claiming depreciation has elapsed, the taxpayer may apply the full admissible rate of depreciation rather than calculating proportionate depreciation to the date of sale, so the surplus over WDV for GST is determined using the WDV as per income tax records with the full rate claimed.