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GST on sale of used car

srikumar (audit staff) (1203 Points)

23 December 2018

my client sale used car RS 245000 wdv 31st March 2018 RS.220000
so gst value RS 245000 @ 12 percent under gst act, is it correct

pls explain such concept sir

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9 Replies

Abhishek Saurav (34 Points)
Replied 23 December 2018

yes it is correct

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AUDITOR GSTP (7 Points)
Replied 23 December 2018

GST returns say there is a 5% screen on the fright bill.
Show it outdated column there
The input reverses are going to be in ITC next month.
Why should this be done, so what is the benefit

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Pankaj Rawat (GST Practitioner) (55052 Points)
Replied 23 December 2018

@ Srikumar

As per Notification 8/2018 CT (r)

Vehicle of Vat Regime Sold in GST Regime :
GST is applicable on Profit Margin (Sale-Puchase )

Vehicle Purchased & Sold in GST Regime :
If ITC claim , then GST is on transaction Value
If ITC is not claim , then GST is on Profit Margin (Sale - Purchase)

GST Rate 12 % & 18% is applicable as per CC engine of vehicle mentioned in Notification.

More then 1500 CC , leanth exceeding 4000 MM, GST is 18%

Else ,.. 12%

So , calculate your Gst payable on sale of vehicle as per above said notification

pritesh (CA Final student) (7101 Points)
Replied 23 December 2018

Dear pankaj sir

then sale of fixed asset other than motor vehicle

how Gst will affect in this?
on what amount we need to charge?

Pankaj Rawat (GST Practitioner) (55052 Points)
Replied 23 December 2018

Notification is only in Regard to Vehicle ,

On fixed Asset (other then vehicles) GST is applicable on Transaction Value (Purchase in vat regime & Sold in GST)

Asset Purchase In GST & Sold in GST :

As per schedule 1 : If ITC is claim , GST will be charge on Trasaction value

"* if it is sold before 5 years
Let us understand with an example:-
Assets used 4yr + 6monts 15 days which is count to be 4yrs..+7months (months remaining 5month un used )
Purchasing Value of Assets is Rs 50,000 + 18% of GST is (9000) = Total Value of Asset is Rs 59,000, ITC Taken = Rs 9,000

Formula : ITC X months remain / 60

So ITC of balance useful life = 9000*5/60 = Rs 750 (Amount)

Let’s assume actual consideration/Transaction amount is Rs 4000. Tax calculated = 4000*18% = Rs 720 (Tax Amount)

Now comparison of Amount and Tax i.e., Rs 750 and Rs 720 respectively. The amount is higher as compared to taxes. However, the registered person under GST will have to pay Rs 750 and should be furnished in GSTR- 1 Form. Therefore, it is necessary to prepared tax invoices in this case with invoice amounting Rs 4000 plus 750 is equal to Rs 4750. However, taxable value to be furnished in the invoice, as well as GSTR – 1 Form, will be Rs. 4167. (4167 × 18%=750)

Kindly Refer Rule 44

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pritesh (CA Final student) (7101 Points)
Replied 23 December 2018

tqsm pankaj sir.....

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srikumar (audit staff) (1203 Points)
Replied 23 December 2018

my client selling used car to second hand registered dealers, so gst 12 percent will raise,? suppose such second hand registered dealers claim such gst 12 percent input ?

Pankaj Rawat (GST Practitioner) (55052 Points)
Replied 23 December 2018

Gst will be charge as per Notification 8 (As refer above)
Yes dealer can claim ITC on same & when further sell it the GST will be on Transaction Value

CA Akshay Hiregange (Partner - Audit & Assistance) (4515 Points)
Replied 24 December 2018

Please note WDV to be taken as per Income Tax Act 1961, and as on the sale date to arrive at the accurate margin.

Dealer can claim ITC, although he may not so that he also can sell the car at 12/18% as per notification 8/2018. (clause "ii" under explanation applicable for dealer)