Clarification Regarding Applicable GST Rate on Sale of Second-hand Trucks.

[Govinda R]

Hi,

Can anyone help me with the applicable GST rate?

I am engaged in the business of buying and selling second-hand trucks. I purchase the trucks from a company that does not charge GST, so the GST liability falls on me.

For example, I buy a truck for ?10,00,000, make some minor modifications, and then sell it for ?12,00,000.

Is Rule 32(5) applicable in my case? If yes, what would be the applicable GST rate? I do not want to claim any input tax credit, as the seller does not charge GST.

Lastly, how should I report my turnover under GST and Income Tax?

Since my bank receipts will show ?12,00,000, but under GST I declare only my margin of ?2,00,000, wont there be a mismatch between the GST turnover and the Income Tax turnover?

And pls let me know is there any other way which will be beneficial.

AI Summary

Second-hand truck dealers can pay GST on profit margin under Rule 32(5) instead of full sale value A business owner engaged in buying and selling second-hand trucks sought clarification on applicable GST rates. The owner purchases trucks from entities not charging GST and makes minor modifications before resale. For a truck purchased at ₹10,00,000 and sold at ₹12,00,000, legal experts confirmed Rule 32(5) of CGST Rules 2017 applies, allowing taxation on the margin of ₹2,00,000 rather than full sale value. The applicable GST rate is 18% on the margin, resulting in ₹36,000 tax liability. This concessional valuation requires no input tax credit claims and maintains the truck's original nature. A turnover reporting mismatch exists between GST law (margin-based at ₹2,00,000) and Income Tax Act (gross receipts at ₹12,00,000), which must be reconciled in financial statements. Experts recommended maintaining proper documentation and filing appropriate returns including GSTR-9 and GSTR-9C for reconciliation purposes.