GST on old, used cars only when sale price higher than depreciated value

New Delhi PTI:  A registered person will have to pay GST on the sale of the old and used vehicle only if the seller has earned a margin, which is the selling price is higher than the depreciationadjusted cost price of the vehicle, sources said. The GST Council in its meeting last week decided to prescribe a single rate of 18 per cent on sale of all old and used vehicles including EVs, earlier leviable at different rates. If an individual sells old and used car to another individual, GST would not be applicable.

Sources said where the registered person has claimed depreciation under Section 32 of the Income Tax Act 1961, GST is payable only on the value representing the margin of the supplier, that is the difference between consideration received for the supply of such goods and the depreciated value of such goods on the date of supply."Where such margin is negative, no GST is payable," a source said.

For example, if a registered person is selling an old and used vehicle to any person at Rs 10 lakh, where the purchase price of the vehicle was Rs 20 lakh and has claimed depreciation of Rs 8 lakh on the same under Income Tax Act, then he is not required to pay any GST as the margin of the supplier, that is differential value of the selling price (Rs 10 lakh) and the depreciated value which is Rs 12 lakhs, is negative. In case the depreciated value in the above example remains the same at Rs 12 lakh and the selling price is Rs 15 lakh, GST will be payable on the margin of the supplier i.e on Rs 3 lakh at the rate of 18 per cent. In any other cases, GST is payable only on the value that represents the margin of the supplier i.e. the difference between selling price and the purchase price.

Again, where such margin is negative, no GST is payable. For example, if a registered person is selling an old and used vehicle to any person at Rs 10 lakh, where the purchase price of the vehicle by the registered person was Rs 12 lakh, then he is not required to pay any GST as the margin of the supplier is negative in this case.