15 March 2019
GST Rate -18% (i) on Old and used, petrol Liquefied petroleum gases (LPG) or compressed natural gas (CNG) driven motor vehicles of engine capacity of 1200 cc or more and of length of 4000 mm or more. (ii) on Old and used, diesel driven motor vehicles of engine capacity of 1500 cc or more and of length of 4000 mm (iii) on Old and used motor vehicles of engine capacity exceeding 1500 cc, popularly known as Sports Utility Vehicles (SUVs) including utility vehicles.
GST-12% on All Old and used Vehicles other than those mentioned above (i to iii)
09 August 2024
When selling an old car, such as an i10, under GST, the tax treatment depends on several factors. Here’s a breakdown of the GST rate, the tax deposit process, and how to reverse any excess tax deposit:
### **1. GST Rate on Sale of Old Car:**
- **Old Car Sale:** GST on the sale of an old car is typically applicable under the reverse charge mechanism (RCM) for the sale of used goods. - **Rate:** As of the current GST rules, the rate for the sale of old cars is generally **12%** GST, with no additional cess. The tax is calculated on the **margin** (difference between selling price and purchase price), not on the full selling price.
### **2. Tax Deposit and Filing:**
- **Tax Rate:** You mentioned depositing **28% GST** and **1% cess**. This is incorrect for the sale of an old car. The rate should be 12% GST on the margin, without cess. - **RCM Filing:** Since the transaction is under RCM, you should file the tax liability under RCM in **GSTR-3B**.
### **3. Reversing Excess Tax Deposit:**
To reverse the excess tax deposited, follow these steps:
1. **Check Your Tax Payment:** - Ensure that the excess tax payment is correctly identified. Compare the tax rate and amount deposited with the actual GST liability.
2. **Amend Your GSTR-3B:** - If you realize the error in a subsequent period, you can amend the GSTR-3B return where the excess tax was reported. - Adjust the excess amount in the current GSTR-3B filing by reducing the tax amount to reflect the actual liability.
3. **Claim Refund or Adjust:** - **Refund:** If the excess amount was deposited incorrectly, you can apply for a refund of the excess amount through the **GST Refund Application**. - **Adjust:** If you are continuously liable for GST and have future GST liabilities, you can adjust the excess deposit against future GST liabilities.
4. **Consult GST Practitioner:** - It is advisable to consult a GST practitioner or tax consultant to ensure compliance with the GST rules and proper filing.
### **Steps to Reverse Excess Tax Payment:**
1. **Access the GST Portal:** Login to the GST portal with your credentials. 2. **Navigate to Refund Section:** Go to the Refund section and select "Refund of Excess Payment of Tax." 3. **Fill Out the Refund Form:** Enter details of the excess payment and submit the form. 4. **Submit Supporting Documents:** Attach necessary documents, such as proof of excess payment and a copy of the GSTR-3B where the excess payment was reported. 5. **Track Refund Status:** Monitor the status of your refund application on the GST portal.
### **Important Notes:**
- **No Depreciation Adjustment:** As mentioned, no depreciation adjustment is relevant in this case since GST on the sale of used cars is calculated on the margin. - **Correct Rate:** Ensure you apply the correct GST rate (12%) on the margin for used goods and not the standard rate of 28% with cess.
For precise handling of your case and compliance, it is recommended to consult a GST expert or tax consultant.
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