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GST ON SALE OF VEHICLES

subramanyanadig (Accounts officer) (52 Points)

03 December 2019

How to calculate Gst on sale of capital items

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2 Replies

Brijesh Pandey (Accountant) (475 Points)
Replied 03 December 2019

GST will be calculated based on the business you are engaged in:

1. If you are engaged supply of New Motor vehicle/ New Capital goods it will be determined as normal i.e. Transction Value (Sales Consideration)*GST Rate applicable

2. If you are enaged in supply of old/used motor vehicle and capital goods then follow the below:

For Capital Goods: Value will be determined as per rule 32(5) of the CGST (Determination of Value Rules) 2017

For Old/Used Vehicles: It will be determined following the notification no. 37/2017 dtd 13.10.2017 or 08/2018 dtd 25/01/2018.

Pankaj Rawat (GST Practitioner) (55037 Points)
Replied 03 December 2019

In case of Vehicle:
As per Notification 8/2018 CT (r)

Vehicle of Vat Regime Sold in GST Regime :
GST is applicable on Profit Margin (Sale-Puchase )

Vehicle Purchased & Sold in GST Regime :

If ITC claim , then GST is on transaction Value for
If ITC is not claim , then GST is on Profit Margin (Sale - Purchase

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%

In case of Capital Goods other then Vehicle:
Purchase in Vat Regime:
GST is applicable always on transaction value

Purchase In GST Regime : (ITC being claimed)

As per Section 18(6), read with Rule 44(1)(b) of CGST Act: the supply of capital goods on which ITC has been claimed , the registered person is liable to pay GST equal to the input tax credit taken on said capital goods reduced by such percentage points

Let us understand with an example:-
Assets used 4yr + 6monts 15 days which is count to be 4yrs..+7months (months remaining 5month un used )
Purchasing Value of Assets is Rs 50,000 + 18% of GST is (9000) = Total Value of Asset is Rs 59,000, ITC Taken = Rs 9,000

Formula : ITC X months remain / 60

So ITC of balance useful life = 9000*5/60 = Rs 750 (Amount)

Let’s assume actual consideration amount is Rs 4000. Tax calculated = 4000*18% = Rs 720 (Tax Amount)

Now comparison of Amount and Tax i.e., Rs 750 and Rs 720 respectively. The amount is higher as compared to taxes. However, the registered person under GST will have to pay Rs 750 and should be furnished in GSTR- 1 Form.

Note : Rule 35(5) : prescribed , person deals in sale purchase of 2nd hand goods