SUB GST p5.3

GST on sale of old and used vehicle

18 May 2020

Is GST applicable on old and used car sales?

Yes, GST shall be applicable to sale of old used cars. 

After the implementation of GST on sale of vehicles that are used and old were taxed at the same rate as applicable on new vehicles which were 28% + Applicable cess which was up to 15%, and because of this, the effective tax rate on the sale of vehicles was up to 43%. This Higher taxation rate was causing a burden on the trade and industry. 

GST shall be charged on the amount of margin-

Sales value XXX

Less: WDV of the car as per Income tax.           (XXX)

The rate would be 12% (18% for SUV) [Refer to Notification No. 8/2018 -Central Tax (Rate) dated on 25th January, 2018.]

Here, Big Relief on Sale of Old and Used Vehicles:

Government by issuing the Notification No. 8/2018 Central Tax Rate reduced the Rate of GST on an 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 the 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 the length of 4000 mm

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

4. GST-12% on All Old and used Vehicles 

However, the Government also exempted the Cess applicable on sale of Used vehicles through Notification No. 1/2018 Compensation Cess Rate.

Sale of used vehicles supplied by Government– In this case of used vehicles, supplied by the Central Government, State Government, Union territory, or a local authority, the registered person receiving the supply is liable to pay tax under reverse charge.

In case of sale of used vehicles supplied by the Government to an unregistered person, the respective department of Central Government, State Government, Union territory, or local authority should obtain GST registration and pay GST.