Sale of used Electric vehicle - Ntfn: 8/2018 -Central Tax (Rate)

[Prakash and Thiagarajan]

Dear Members,

Currently, electrically operated vehicles are chargeable to tax at 5% (2.5/2.5). However, in the case of used vehicle, benefit can be taken of Notification 8/2018-CTR to pay tax on margin. If this is opted, then the tax rate is 12% (6/6) vide entry 4 of the said notification. Considering the value of the used car, 5% rate on the total consideration is beneficial than opting for margin scheme at 12%. Further, as the above notification is not absolute, my view is to pay tax on total consideration at 5% instead of 12% on margin value.

Any other views/suggestions.

Rgds, Ganesh.

[Padmanathan KV]

Sir,

Pls find the Notification 8/2018-CTR:

"G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 11 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby exempts the central tax on intra-state supplies of goods, the description of which is specified in column (3) of the Table below, falling under the tariff item, sub-heading, heading or Chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), as are given in corresponding entry in column (2), from so much tax as specified in Schedule IV of Notification No. 1/2017 -Central Tax (Rate), as is in excess of the amount calculated at the rate specified in the corresponding entry in column (4), of the said Table, on the value that represent margin of the supplier, on supply of such goods. "

The tax rate for entries in Schedule IV is 14% (28% C + S)

Whereas, as mentioned by you in query "electronically operated vehicles" comes under Schedule I - 2.5% (5% C + S)

Therefore, in my opinion, the notification 8/2018 may not apply itself to "electronically operated vehicles" since it falls under Schedule I and not Schedule IV of Notification 1/2017.

[Prakash and Thiagarajan]

Thanks Sir.

AI Summary

GST on used electric vehicles: consider charging the standard rate on full consideration instead of applying the margin scheme.
The margin-scheme exemption taxes the supplier's margin at the rate applicable to goods in the schedule covered by that provision, but electrically operated vehicles fall under a lower-rate schedule; therefore the margin scheme provision may not apply and tax should be charged on the total consideration at the scheduled lower rate for electrically operated vehicles rather than on the margin.