Generally, when you buy a specified motor vehicle from a GST/HST registrant (for example, a dealership), the GST/HST applies on the sale. This requirement is still applicable even though you may have recorded the Singapore dollar value of the purchases in your own books at a rate of exchange different from that used by the supplier. Copyright Clearmytax. Else such dealer can avail ITC and in such a case value of supply would be the actual selling price of the second hand car. It may be noted here that input tax credit on motor vehicles is generally blocked under Section 17(5)(a) of the CGST Act, 2017 and is available when such motor vehicle is used for further supply, transportation of passengers and imparting training of driving of such vehicles. The vehicle will be used approximately 60% for business use, and 40% for personal use, so the ITC is based on the capital cost allowance for the vehicle at the end of each year. This note is excludes the Motor vehicles used by the goods or passenger transporters. As in the above case the depreciated value comes to Rs 3,93,125/- while the selling price is Rs 2,50,000/- thus the margin for supplier is negative Rs 1,43,125/- , which shall be ignored and the value of supply for levy of GST will be NIL in this case. Section 17 (5) of CGST Act provides for denial of the input credit on motor vehicles and other conveyances except when they are used, i) for making the following taxable supplies, namely:—, (a) further supply of such motor vehicles or conveyances ; or. Ans: Yes, ITC can be availed as credit of only passenger vehicle is blocked under Section 17(5). GST on sale of Used Vehicles (Before 18/01/2018) – 28% (GST) + 15% (Cess) However, the GST Council, in its 25th meeting held on January 18, 2018, decided to cut tax rates on a number of products & services, including the sale of old and used cars. It may be noted here that the depreciated value here means as per the Income Tax Act. Used car dealers pay taxes on the difference between the selling price and the buying price of a second-hand car. This will need to be recorded as an asset so that it appears on your financial statement. In other cases: Margin of Supplier shall be difference between selling price and the purchase price where the margin of such supply is negative, it shall be ignored. Apportioning GST. There are rules concerning luxury car purchases, leased vehicles and purchasing second-hand. Can a company pay gst at different rates for buses given on contract as staff buses (18 % with itc) and daily services (5 % with no itc), There is no such restriction. Prior to implementation of GST w.e.f. Thus the above reduced GST rates and NIL cess rate would be applicable on sale of old vehicles. Subscribe to our newsletter from FREE to stay updated on GST Law. 8/2018 Central Tax (Rate) dated 25.01.2018 (similar notifications under other GST Act(s)), the Rate of GST applicable on sale of on old and used vehicle in such cases are as follows: 1. 02 April 2020 Yes, ITC can be availed as the person is engaged in supply where service of transport is an integral part of contract for supply of goods. The rate of deprecation is 15% WDV. However, the government has never considered this request fearing a loss in revenue. According to section 69-10 of the GST Act the amount of input tax credit is limited where the GST inclusive market value of a car exceeds the car limit for the financial year in which an entity first used the car for any purpose. Suppose in this case the selling price of Car was Rs 4 lakhs. In such a case also, if sale price exceeds purchase price( which is next to possible), GST will be payable on above rates on such margin to supplier. In case, the margin of the transaction is negative; dealers do not have to pay GST on the car. In case a used car is sold by any individual for purchasing a new car or otherwise and such individual is not engaged in business of buying and selling cars. and above. 76/50/2018-GST dated 31-12-2018. The input credit against such taxes and duty was not available, except under some specific instances, to the manufacturers, traders, works contractors, job-workers and the service providers others than service for transport of goods and/or passengers (collectively referred to herein as “the business entities”, The provisions related to input credit under GST law are similar to that of old regime. In such a case, such person needs to see whether upon including consideration for sale old car the turnover exceeds the threshold exemption limit. As per clause (a) of sub-section (1) of Section 7 , in order to constitute a supply the sale should be made by a person in the course of furtherance of business. One of the ineligibilities is Motor vehicle purchased for purpose other than for renting out or further sale. 2-Wheeler/4-Wheeler/Bus etc. 1st July 2017 the Vehicle for transport of passengers and goods suffered excise duty and CST or VAT (referred to herein as “the taxes under Old regime”). The following are some key instances where GST rate on vehicles is 12%: Vehicles that are driven by electric motors (including 2 and 3 wheel vehicles) In Case Depreciation under Income Tax Act Availed: Margin of the supplier shall be difference between Sale consideration and depreciated value of such vehicles on date of sale and where the margin of such supply is negative, it shall be ignored. 13-10-2017 in case of used vehicles, supplied by Central Government, State Government, Union territory or a local authority, the registered person receiving the supply is liable to pay tax under reverse charge. However in cases where the dealer buys old vehicle from a registered person which charges GST on the sale, the dealer has two options either not to avail ITC and opt for special valuation Rule 32(5) , however in such cases such dealer will also not be able to avail ITC on any expenses incurred by him in minor processing / repairs to the Car. The GST council has increased the cess rate on larger and mid-sized cars in India. Post that, GST rate on used vehicles sale was reduced and cess was removed from such supplies. 17% for cars having engine capacity not exceeding 1500 cc, else 20%. Sir To work out the cost including GST, you multiply the amount exclusive of GST by 1.1. Here even though the sale of old car by an individual is for a consideration, it cannot be said to be in the course of furtherance of his business, and hence does not qualify to be a supply per se. Often, these types of errors are unintentional and simply overlooked. Such dealers can supply the goods as such or after minor processing which does not change the nature of such goods. In case under Illustration 1 , X Ltd had not availed depreciation as per Income Tax the margin of supplier would be Rs 2.50 lakhs ( selling price) minus Rs 5 lakhs (purchase price) which being negative will be regarded as NIL and thus no GST is payable as value of supply is NIL. As per Notification No. In order to submit a comment to this post, please write this code along with your comment: 2f95ed3762ac0c01a6df54418b1cf57b. GST @ 18% (CGST + SGST or IGST) on Old and used motor vehicles of engine capacity exceeding 1500 cc, popularly known as Sports Utility Vehicles (SUVs) including utility vehicles. Furthermore, for the purposes of the Luxury Car Tax Act, if an entity is not entitled to quote an … (c) imparting training on driving, flying, navigating such motor vehicles or conveyances; In view of the above the input credit, for inward supply of vehicles and other expenses incurred in relation to such vehicles, shall not be deniable in following cases: 1. where the motor vehicles are used by the business entities referred here in above for transport of inputs, semi-finished goods, out-put and/or capital goods, plant, machinery, spares, stores and/or fuel, 2. We are running a Rent a Cab Business ( Travels ) and we are registered partnership firm in GST depreciated purchase price. The purchaser can claim ITC on Purchase of Motor Vehicles only if he engaged in any of the following business: 1.Supply of other vehicles or conveyances, vessels or aircraft. For example, you purchased a passenger vehicle from a GST registrant in Alberta for $60,000 and, at the time you brought the vehicle into BC, the depreciated purchase price of the vehicle was $40,000. If you purchase a second-hand motor vehicle from someone who is not registered for GST and you are purchasing the vehicle to sell or exchange it, you may be entitled to claim a GST credit. GST slab rate on Cars for physically handicapped persons . 08/2018 Central Tax (Rate). Note: SUV includes a motor vehicle of length exceeding 4000 mm and having ground clearance of 170 mm. Let’s assume that your business purchases a new van on January 1. Please write to [email protected] or call our team at +919971022252 for further details. Where the business entities referred to here-in above use the vehicle for transport of its staff or workers on chargeable basis. For the first line please read the following : The rate of tax at 5% is applicable only in case ITC is not availed and therefore, you can not claim ITC. GST @ 18% (CGST + SGST or IGST) 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. GST being an ad valorem tax, in cases where GST is applicable on supply of old vehicles, we need to determine the value of supply, on which applicable GST rate shall be applied to find out the GST payable. The clear cut separate accounting of the services- input and out put is required to be maintained. You should use the Discounted Sale Price Scheme and charge GST on 50% of the selling price of the used vehicle. 2. Frah Saeed is a law graduate specialising in the core field of indirect taxes and is the Co-founder of clearmytax.in. Effectively, if you buy a new car for $25,000, there is already $2273 of GST included in your car purchase. GST rate on sale or purchase of Electrically operated vehicles. Purchase of Vehicle & GST Implications www.thetaxtalk - Since the GST law has came into force various notifications and amendment has been made on issue of old car sale. Copyright © TaxGuru. 2.Transportation of passengers. If you use a motor vehicle solely in carrying on your business and you're registered for GST, you’re generally entitled to claim a credit for the GST included in the price of the vehicle, provided you have a tax invoice. For some special supplies, such as secondhand goods, you may still be able to claim GST. within State supply (supplier and recipient in same State / UT) as in case of Inter-State supply of goods, registration becomes mandatory as per Section 24 irrespective of quantum of aggregate turnover and consequently payment of GST will be trigerred in such cases. As in majority of cases ITC is blocked for motor vehicles and thus no question of it being availed . It is also important to note here that in this case the concessional rates of GST on sale of old vehicles would not be applicable on the outward supplies by such car dealers and normal rate of GST would be applicable i.e. As sale of old car does not amount of supply, no GST thereon will be applicable irrespective of the fact whether such sale is being made to another unregistered individual or a registered person / car dealer. The term supply has been defined under Section 7 … There may be a situation where a person is engaged in any business and using the vehicle for business purposes , but due to its aggregate turnover being less than the threshold exemption limit of Rs 40 lakhs / Rs 20 lakhs / Rs 10 lakhs , has not obtained GST registration. Kindly advice me sir, I am.having a company I purchased d car on company name for company use can I get gst. hello sir This lower rate was introduced at the 31 st GST Council Meeting held in December 2018. A reduction in GST will lower the upfront cost of vehicles, thereby acting as the necessary push towards improving sales during the ongoing unprecedented sales slump in the automotive industry. Further in such a situation you will also be able to avail input tax credit in regard to GST paid on Services of general insurance, servicing, repair and maintenance of said Truck. GST is a tax on supply of goods or services. In this article we shall deliberate upon the GST treatment on sale of old and used motor vehicles / cars under various situations. We are eligible to take ITC ? If the cost of the vehicle is more than $300, you can claim the GST credit when you sell the vehicle, provided the sale of the vehicle by you is a taxable sale. Other GST credit adjustments. What is the rate of GST on sale of used motor vehicles/cars ? FAQs on quarterly filing of GSTR-3B and monthly payment of tax (QRMP Scheme), GST E-invoicing: Answers to 10 FAQs you should know, FAQs on Aadhar Authentication while obtaining GST Registration, FAQs on Registration and login on GST e-invoice portal, FAQs on blocking and unblocking of e-way bill generation facility in EWB portal, FAQs on how to opt for Composition Scheme. All rights reserved. GST rate which is levied and its ITC provisions depend on what type of passenger vehicle we purchase i.e. Can we claim ITC on Capital goods in the Trading business of Used or Old Vehicles? The. The term supply has been defined under Section 7 of the CGST Act,2017. Buying from non-registered suppliers. Yes, the invoice has to be raised for selling capital goods with GST. If someone is into the business of transport of passengers, and the person is into 5% scheme (i.e. If you buy goods or services from an unregistered person, you won't be charged GST. 9 (4) of CGST Act & 5(4) of IGST Act after recent Amendments, Common Maintenance Collected by Residents welfare Association and GST, Amount received for security services including amount of wages for guards taxable @18%, GST on ocean freight and scope of delegated legislation, Advisory on Reconciliation Statement (GSTR-9C ), Exclusion of small scale ice cream manufacturers from composition scheme benefit to be reconsidered by GST Council, Will exemption from ITR filing proposal for senior citizen will work, No Reopening On Borrowed Satisfaction Without Bringing Tangible Material on Record, HC directs DGFT Surat decide on removal of IEC code from denial entity list, Reserve Bank of India (Digital Payment Security Controls) directions, 2021, SC rules that Reasoned Judgements to be delivered along with Operative Orders, Section 153C: ITAT directs CIT(A) top examine recording of satisfaction, Model Financial Statements for Non-Corporate Entities, Mixed fund Presumption cannot be applied to Specific Purpose Loan, Submit Letter of Undertaking (LUT) for FY 2021-22 by 31.03.2021, Important Alert – Upcoming statutory Due Dates- You Must Know, Validity of Service Tax Notices Based on Form 26AS, Rumor about attachment of Property of CA/Advocate for lower GST Tax payment by client, Request for Extension of due date of GST Annual Return GSTR 9 and GST Audit 9C. If you purchase a vehicle in a private sale or receive it as a gift in certain circumstances, you must pay PST on the purchase or gift. I am registered for Gst and have just started to trade again but will show no income for this financial year. Disclaimer:The article or blog or post (by whatever name) in this website is based on the writer’s personal views and interpretation of Act. GST Memorandum 8-2 sets the following limits for claiming HST ITC for a purchased passenger vehicle: ITC entitlement on passenger vehicles and aircraft Corporations can claim the full HST ITC if the passenger vehicle is used primarily (over 50%) for commercial activities. The GST rates for small cars continues to stay at 43%(28% GST+15% Cess) while a new mid size segment for cars has been created with a new total GST rate of 45%(28% GST+17% Cess). In such case we need to determine depreciated value as per Income Tax. The same 5% GST rate also applies to parts/accessories of carriages for use by disabled people. This vehicle we are using for business purposes only. Suppose such car is sold for Rs 2.50 lakhs on 27.09.2020. Car Dealers would be required to charge concessional rate of GST to the individual in whose name GST certificate is issued and stamp the invoice of all such cars purchased with GST concession with hologram symbol of To be registered as Adapted vehicle’. ITC is not available where composition scheme is available. 3. 2. Maintained by V2Technosys.com, Taxguru Consultancy & Online Publication LLP, 509, Swapna Siddhi, Akurli Road, Near Railway Station, Kandivali (East), Input Credit of GST on Purchase of Motor Vehicle, Liability of RCM u/s. I am an individual and I provide crane service and I purchase a crane. Accordingly the margin of supplier will be Rs 6875/- ( Rs 4,00,000/- minus Rs 3,93,125/- ) on which concessional rate of GST @ 18 % or 12% as the case be would be applicable. The credit is the … Budget 2021: GST Audit by professionals scrapped? Notification No. However SUVs would be subject to 22% cess on the value of supply over and above the general rate of GST of 28%. Purchasing a second-hand motor vehicle. Example of a New Vehicle Purchase. sale of old car what is rate of tax for sale of old car? 4/2017-CT (Rate) dated 28-6-2017 amended vide Notification No. Such will be the cases where the car dealer buys old Car from individuals, which as discussed supra will not be subject to GST. GST and motor vehicles. To take a decision you need to compare the total amount of ITC forgone on other input and the ITC on Bus v/s. Vehicle Purchased & Sold in GST Regime : If ITC claim , then GST is on transaction Value . Sale of old and used motor vehicles / cars is very common transaction undertaken by persons who are registered under GST law as well as individuals who are not engaged in any business, but sell their old car in order to purchase a new car. I am purchasing a new vehicle. make it compulsory to arrange transport for its staff only then itc is avilable for e.g in case of Genpact not in other cases please clarify, Provision bus service for staff or workers is not covered by Rent-a-cab service and hence the disallowance u/s. What is the maximum GST claimable by the purchaser? GST on sale of old and used vehicle by an individual (not engaged in any business). You divide a GST inclusive cost by 11 to work out the GST component. The van cost $50,000 and your business paid cash for the van. Under GST, any purchase of capital goods, or inputs or input services is eligible for Credit of Input Tax EXCEPT for those which has been stated in Section 17 (5) as ineligible for ITC. Sub 4-metre cars ; Petrol engines less than 1.2l: This is the most popular car segment in India with cars such as Maruti Suzuki Dzire, Hyundai Grand i10, Toyota Etios Liva, Volkswagen Polo among others, that have been levied with a GST rate equal to 29%, a … On 11.11.15 we purchased a vehicle for $19100.00 + GST … All about GST on sale of old and used motor vehicles, Don’t miss the next GST Update / Article / Judicial pronouncement, Temporary retention of GST cess fund in CFI pending reconciliation not diversion: Finance ministry, GST Registration: When required and how to obtain. 1/2018 Compensation Cess (Rate) dated 25.01.2018, Resolve your GST queries from national level experts on GST free of cost. The accounting entries would be as follows: Debit: Van – $50,000.00; Credit: Cash – $50,000.00; But this is not all. GST @ 18% (CGST + SGST or IGST) on Old and used, diesel driven motor vehicles of engine capacity of 1500 cc or more and of length of 4000 mm. Can I still claim the gat content on the vehicle if I have minimal income claimed for last month of financial year. Moreover, ITC on trucks does not … what i have read is-Where the govt. You should claim GST incurred on such purchases based on the Singapore dollar GST stated in the tax invoice. increased tax payable without composition and also the possibility of full or partial increase in the rate, Your email address will not be published. Sir, Further income tax law requires computation of depreciation on block of assets , but for the purpose of computation of margin as above , the depreciated value should be determined for the specific vehicle which is being sold. 1/2018 Compensation Cess (Rate) dated 25.01.2018. 4. Special supplies. It may be noted here that even the registered person / car dealer buying old car from such individual is not required pay GST under reverse charge, as such transaction is not notified for purposes of payment under reverse charge. Smaller cars with petrol engines upto 1200 cc and diesel engines upto 1500 cc have not been changed as expected. Now we have parched new Commercial vehicle seating capacity in 8 including driver. As per Notification No. The GST/HST rate to be used generally depends on several criteria such as the place of delivery and date of registration. Following are rates as per notification no. the purchase price over $30,000 for a passenger vehicle if you are renting the passenger vehicle, the limit is $800 per month 2a If you use the vehicle or aircraft in both commercial and non-commercial activities, only the part of the CCA attributable to the commercial activities can be used to calculate your ITCs. However, If ITC is not claim , then GST is on Profit Margin (Sale – Purchase) For any questions, you may reach us at Discussion Forum. It helps to eliminate the cascading effect of taxation. Changes of GST rate over a period of time: GST rate in case of old and used car was same as applicable on new car up to 25/01/2018. The consultants etc. GST/HST on the sale of a specified motor vehicle by a GST/HST registrant. is this eligible for INPUT GST CREDIT or NOT ? Rule 32(5) of CGST Rules 2017 provides special valuation in case of persons dealing in buying and selling of second hand goods including used vehicles. Subscribe our portal and get FREE GST e-books , articles and updates on your e-mail. 17(5) (b) (iii) is not applicable. How much you can receive The maximum value of the car is $59,136 including GST. However in case a person was eligible to avail and has in fact availed input tax credit on motor vehicle which he is now selling, normal GST rate of 28% plus 17% / 20% / 22% towards Compensation Cess, as applicable need to be charged and paid on sale of such motor vehicle. The clear cut separate accounting of the car the government has never considered this fearing. 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