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WANT TO SELL A CAR

HARSHIL JAIN (MD) (338 Points)

27 April 2021

we have purchased car 2 years back in our gst registered firm.

now have applied for cancellation of GST due to losses so how do we sell that car and what all needs to be taken care of.

plz brief on the same.

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6 Replies

CA. Sourav Sarkar (Chartered Accountant ) (24583 Points)
Replied 27 April 2021

Sale the car before cancellation by following the standards.

After the implementation of GST sale of used and old vehicles were taxed at the same rate as applicable on new vehicles which was 28% + Applicable cess which was up to 15%, and due to this effective tax on sale of old vehicles was upto 43%. This higher rate of tax was causing the burden on trade and industry and due to this there was slow down in the used vehicle market.

Government by issuing the Notification No. 8/2018 Central Tax Rate read with state Tax Notification, reduced the Rate of GST on old and used vehicle as follows:

1. GST-18% 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.

2. GST-18% on Old and used, diesel driven motor vehicles of engine capacity of 1500 cc or more and of length of 4000 mm

3. GST-18% on Old and used motor vehicles of engine capacity exceeding 1500 cc, popularly known as Sports Utility Vehicles (SUVs) including utility

4. GST-12% on All Old and used Vehicles other than those mentioned from S. No. 1 to No.3

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chethan data (298 Points)
Replied 27 April 2021

Sir at what cost u selling because if u sell a car less than WDV then gst not implications but if u sell the car
more than WDV then gst applicable respective rate on CC

Pankaj Rawat (GST Practitioner) (55052 Points)
Replied 28 April 2021

In term of Section 17(5) the credit is not available on purchase of car , so I assume that you would have not claimed the ITC on its purchased.
In term Notification 8/2018 CT (R)

If ITC is not claim , then GST is on Profit Margin (Sale - Purchase), ignore if there is loss No GST attract.

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%

Note :
If ITC claim , then GST is on transaction Value .

Lotus Agrawal (Practice) (1361 Points)
Replied 28 April 2021

Agreed with Mr. pankaj with a modification that if depreciation has been charged on the car then GST shall be levied on sale price less written down value of the car.