GST on Sale of Old and Used Vehicles: 18% GST Rate and Guidelines | FAQs
By: Admin
Date: December 25, 2024
Category: GST Recent News
Reading Time: 4 Minutes
The GST Council recently introduced a unified 18% GST rate for the sale of old and used vehicles, including electric vehicles (EVs). This reform streamlines the previous tax structure and brings clarity to compliance requirements. Below, we address the key highlights and frequently asked questions related to the new guidelines.
Key Highlights of GST on Used Vehicles
- Uniform 18% GST Rate
The 55th GST Council meeting recommended a standardized GST rate for all old and used vehicles, including EVs. - GST Liability
Registered businesses involved in the sale of used vehicles are responsible for paying GST. - No GST on Individual Sales
Transactions between private individuals are exempt from GST. - Margin-Based Calculation
GST applies only to the profit margin. This is calculated as either the difference between the selling price and purchase price or the depreciated value, depending on circumstances.
FAQs
What is the new GST rate for old and used vehicles?
The GST Council has set a single 18% GST rate for all old and used vehicles, including EVs. No additional taxes apply.
Who must pay GST on these sales?
Only registered businesses engaged in buying and selling used vehicles are liable to pay GST.
Is GST applicable when an individual sells a used car to another individual?
No, GST does not apply to individual-to-individual transactions.
How is GST calculated?
- With depreciation claimed:
GST applies to the margin calculated as:
Margin = Selling Price – Depreciated Value - Without depreciation claimed:
GST applies to the margin calculated as:
Margin = Selling Price – Purchase Price
If the margin is negative, no GST is payable.
Illustrations
Example 1: No GST Applicable
- Selling Price: ₹10 lakh
- Purchase Price: ₹20 lakh
- Depreciation Claimed: ₹8 lakh
- Depreciated Value: ₹12 lakh
- Margin: ₹10 lakh – ₹12 lakh = Negative
Result: No GST is payable.
Example 2: GST Payable
- Selling Price: ₹15 lakh
- Depreciated Value: ₹12 lakh
- Margin: ₹15 lakh – ₹12 lakh = ₹3 lakh
Result: GST is payable on ₹3 lakh @18%.
Example 3: GST Payable
- Selling Price: ₹22 lakh
- Purchase Price: ₹20 lakh
- Margin: ₹22 lakh – ₹20 lakh = ₹2 lakh
Result: GST is payable on ₹2 lakh @18%.
Why It Matters
These guidelines simplify GST compliance for businesses while addressing common scenarios clearly. Consequently, they provide confidence to stakeholders in adhering to tax regulations.
