Sale of used car to employees by company

[Priyesh Mamnani]

Suppose Company X is purchasing car for employees at ₹ 100/- . It pays ₹ 85/- by itself and recovering ₹ 15/- from employees at the time of purchase.Company records cars in it's fixed asset at ₹ 85/- only. Now after 6 years company sold the car to employees at ₹ 10 /- and transfer the ownership to employees. So what will be the transaction value for company at the time of sale? ₹ 15 paid earlier at the time of purchase has to be included or not? Whether the company has to pay the tax on ₹ 15/- recovered from employees at the time of purchase?

AI Summary

GST Applies to Initial Recovery in Employee Car Sales; Only Final Sale Price Taxable per Notification 8/2018 A company sold used cars to employees, initially purchased at 100, with 85 paid by the company and 15 recovered from employees. The cars were recorded as fixed assets at 85. After six years, the cars were sold to employees for 10. The discussion focused on whether GST should apply to the 15 initially recovered. It was concluded that GST applies to the 15 as it represents consideration for the car's use. However, at the time of sale, only the 10 is taxable. The transaction's valuation should consider the margin between the sale price and the written-down value, following notification 8/2018.