SALES OFOLD MOTOR CAR

[SURYAKANT MITHBAVKAR]

We have to sell an old Motor Car which was brought in Sept-2017. The depreciated Value as on 31.03.23 is Rs.4,06,200/-.& now the sale value is Rs. 5,50,000/-. (Old & used diesel driven motor vehicles of engine capacity is 2523cc).

Whether we have to charge GST on the above sale. If yes, what amount we have to consider for GST.

Is there any exemption. If yes under which notification.

[Ashika Agarwal]

ITC on Motor Vehicle is blocked except in certain case it is allowed.

If you have not availed ITC being covered under blocked credit, you can refer to No. No. 8/2018-CTR.

Note: For this Notification, depreciation as per Income Tax Act to be considered.

If you have claimed ITC being following under exception clause, then you refer to Section 18(6) of the GST Act.

[Kiran Tahelani]

If ITC has not been availed on the said motor car: you are required pay GST on margin i.e. (SP-Income tax depreciated value) at the rate as specified in notification 8/2018 Central Tax (Rate) dated 25.01.2018.

Experts can correct me if I am wrong or misunderstood the query.

[KASTURI SETHI]

Already discussed in this forum. Can be easily traced out.

[Padmanathan KV]

I agree with Ld. friends Ashika and Kiran. Assuming ITC has not been availed you will have to pay GST at 18% on margin (Sale price - WDV).

[Ganeshan Kalyani]

The depreciated value to be arrived at by following Income Tax depreciation rate. In books the depreciated value is as per Companies Act. Hence, from books one cannot take WDV right away to arrive at margin.

[Shilpi Jain]

Cess will be exempt for this transaction if you adopt the option of paying GST on the margin.

AI Summary

GST on margin: tax applies where input tax credit not claimed, computed as sale price minus Income Tax depreciation.
Where input tax credit has not been availed on a used motor car, GST is chargeable under the margin scheme on the margin computed as sale price less the depreciated value determined under Income Tax depreciation rules; the applicable rate follows the margin-scheme notification. If input tax credit was availed, the margin scheme does not apply and the rules governing taxable value where credit was taken must be followed. Adoption of the margin option was noted to exempt cess on the transaction.