Margin scheme for car dealer under GST

[MANOHAR KALBURGI]

Dear sir,

Our car dealer sells used car where such used cars are purchased from unregistered person as well as registered person under GST.

Question. Can we opt for margin scheme for supply taken from unregistered person and apply normal valuation for car purchased from registered person and avail the ITC on it.

Hence my final doubt is that, are both valuation allowed for car dealer ? i.e. One car for valuation under 32(5) and other car for valuation under sec 15.

Thanks in advance.

[Shilpi Jain]

This can be done since it is a conditional valuation and not mandatory

[KASTURI SETHI]

In my view, there is no such restriction. There is also no condition of following margin scheme for all types of supply.

[YAGAY andSUN]

For your kind perusal.

https://www.cbic.gov.in/resources//htdocs-cbec/gst/51_GST_Flyer_Chapter30.pdf;jsessionid=A5CA64E2F898906C898499EC1EA020ED

[Ajay Joshi]

What is 32(5) valuation. Unfortunately the link is taking to section 32 but 32(5) is not there.

[KASTURI SETHI]

It is sub-rule 5 of Rule 32 of CGST Rules, 2017. It is extracted below:-

"5) Where a taxable supply is provided by a person dealing in buying and selling of second hand goods i.e., used goods as such or after such minor processing which does not change the nature of the goods and where no input tax credit has been availed on the purchase of such goods, the value of supply shall be the difference between the selling price and the purchase price and where the value of such supply is negative, it shall be ignored :

Provided that the purchase value of goods repossessed from a defaulting borrower, who is not registered, for the purpose of recovery of a loan or debt shall be deemed to be the purchase price of such goods by the defaulting borrower reduced by five percentage points for every quarter or part thereof, between the date of purchase and the date of disposal by the person making such repossession".

AI Summary

Margin scheme for used vehicles: optional margin valuation allowed where no ITC was claimed, normal valuation applies if ITC is availed. Where a dealer in secondhand motor vehicles has not availed input tax credit on purchase, taxable value may be the margin (selling price minus purchase price) under the margin valuation rule for secondhand goods; this conditional method is optional and may be used for some supplies while supplies on which input tax credit was availed must follow normal valuation rules and permit ITC utilisation subject to GST conditions.