SALE OF OLD CAR

[KERAGODEGOPALARAO ANANTHARAO]

Dear sirs,

One of my client, who is dealer in textiles owning a car, now he sold the car and purchased a new car. Whether GST to be paid on car sold in August 2020.?

[Ganeshan Kalyani]

Yes, Sir GST is applicable on profit component.

[SHARAD ANADA]

Pl refer Notification 8/2018 CGST (Rate)

GST will be applicable on margin value

i.e. sale price - wdv as per Income Tax Act.

For eg sale price is 1.6 lakh and wdv as per Income Tax Act is 1 lakh than GST will be applicable on 60000/-

If sale price is 1.60 lakh and wdv as per Income Tax Act is 1.70 lakh than resultant margine is negative and GST will not be applicable.

Pl also refer other conditions in Notification

[Rajagopalan Ranganathan]

Sir,

In my opinion, he is not liable to pay GST for the reason that he is not engaged in the business of buying and selling old cars. Moreover, his turnover per annum will be less than 20 lakhs since it is the only occasion he is engaged in selling old car. .

[KASTURI SETHI]

When the car in question was purchased, all taxes were paid. Now why to pay tax again at the time of sale of the same car as second hand, especially in view of the fact that car had already suffered duty and VAT. If no credit was taken (presuming that it was for personal use), no GST is payable. If credit was taken, then tax is payable at depreciated value. If depreciated value is in the negative, then no GST.

[KERAGODEGOPALARAO ANANTHARAO]

My client is a registered dealer under GST, claimed the depreciation car in finding out taxable income under Income Tax Act for which I made above query. Now he is purchasing a new car, on which he paid GST which comes under blocked credit U/s 17(5)(a), correct sirs?

[KASTURI SETHI]

Dear KERAGODEGOPALARAO ANANTHARAO,

You are 100% correct. Further, for future, it is my humble request to you whenever you post your query , full and correct facts should be posted at the first instance. Thus the experts will not grope in the dark or in the imagination or presumption. It will save time and energy of querists and experts. I hope you will agree with me.

[Ganeshan Kalyani]

GST credit on car is block u/s17(5).

AI Summary

GST Applicability on Car Sale: Tax on Profit Margin Unless Turnover Below 20 Lakhs or No Credit Claimed A client, a textile dealer, sold an old car and purchased a new one, raising a query about GST applicability on the sale. Responses indicate that GST applies to the profit margin, calculated as the sale price minus the car's written down value (WDV) per the Income Tax Act. If the margin is negative, GST is not applicable. Another view suggests GST is not required since the client is not in the car trading business and has a turnover below 20 lakhs. Additionally, if no credit was claimed when the car was purchased for personal use, GST is not payable.