GST on Old & Used cars – Applicable only on margin of the supplier at 12%/18% without cess

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GST on Old & Used cars – Applicable only on margin of the supplier at 12%/18% without cess

The Government vide Notification No. 8/2018 – Central Tax (Rate) dated January 25, 2018/ Notification No. 9/2018 – Integrated Tax (Rate) dated January 25, 2018, has prescribed that in case of old and used motor vehicles under HSN 8703, GST shall be applicable on the value that represents margin of the supplier, at following rates:

Description of goods Rate of GST * Conditions
Old and Used LPG or CNG driven motor vehicles of engine capacity of 1200 cc or more and of length of 4000 mm or more 18% No ITC/Cenvat credit has been availed under the following:

 

·         GST under the CGST Act, 2017;

·         CENVAT as defined in CENVAT Credit Rules, 2004;

·         ITC of Value Added Tax or any other taxes paid, on such goods

Old and used, diesel driven motor vehicles of engine capacity of 1500 cc or more and of length of 4000 mm 18%
Old and used motor vehicles of engine capacity exceeding 1500 cc, popularly known as Sports Utility Vehicles (SUVs) including utility vehicles 18%
All Old and used Vehicles other than those mentioned above 12%

* The rates specified above is total rate of GST i.e. CGST+SGST/ IGST

No GST if consideration received is not more than depreciated value of old & used cars

Explanation to the above Notifications specifies that Margin of the supplier shall be the difference between selling price and purchase price.

It is further provided that in case of registered person who has claimed depreciation under Income Tax Act, 1961, the value that represents the margin of the supplier shall be: Consideration received for supply – Depreciated value of such goods on the date of supply. Where the margin of such supply is negative, it shall be ignored.

No Compensation Cess on Old & Used motor vehicles –

The Government Vide Notification No. 1/2018 – Compensation Cess (Rate) dated January 25, 2018, has amended Notification No. 1/2017 – Compensation Cess (Rate) dated June 28, 2017, to insert entry 42A that prescribes NIL rate of Compensation Cess on all Old & Used motor vehicles.