TaxTMI 
TaxTMI 
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?
Sale of used car to employees by company
05 Apr 2021 
3 Replies 
13625 Views Asked by
GST valuation: margin scheme applies to sale of depreciable business assets; taxable amount based on margin not earlier recoveries.
The transfer may be taxable as a supply of business assets, but valuation for a depreciable asset follows the margin scheme: taxable amount equals the difference between sale consideration and written down value (WDV) per company books; earlier amounts recovered at initial purchase that were in a pre-GST period or already taxed need not be included again, and negative margins are ignored, subject to challenge on open market value. (AI Summary)
The transfer may be taxable as a supply of business assets, but valuation for a depreciable asset follows the margin scheme: taxable amount equals the difference between sale consideration and written down value (WDV) per company books; earlier amounts recovered at initial purchase that were in a pre-GST period or already taxed need not be included again, and negative margins are ignored, subject to challenge on open market value. (AI Summary)