GST on Old and Used Vehicles: Does Selling a Used Vehicle Attract GST for all individuals?

Mitali | Last updated: 27 December 2024

Save Share

Quick Summary

This article clarifies whether individuals selling old or used vehicles need to pay Goods and Services Tax (GST). It explains the Marginal Scheme, where GST is only applicable on the profit margin (selling price minus purchase price), and negative values are ignored. Generally, individuals selling used cars to friends, relatives, or platforms like CARS24 are exempt from GST. However, dealers selling used cars to customers are liable for GST, with rates recently revised to 18% for most used vehicles, including EVs, though some exceptions apply.

Is it true that the sale of an old or used car would attract more GST or if sold at a loss it will attract more GST on it?

For this let us first know what is a Marginal Scheme

As per Rule 32(5) of CGST Rules, 2017, Marginal Scheme means the value of supply shall be the difference between the selling price and the purchase price and where the value of such supply is negative, it shall be ignored.

As per the provision of GST, no tax is applicable on the negative supply.

Only on the positive difference tax is applicable.

Say for example if the purchase price is 10 Lakh and the selling price is 12 Lakh. The difference is (12L - 10L) = 2L i.e. tax will be applicable on 2L.

Now the question is whether all the individuals need to pay GST who are using used cars.

If an individual sells used cars to friends or relatives then no GST is applicable.
If an individual sells used cars to a dealer like CARS24 - No GST
If a dealer sells used cars (purchased from an individual customer) to a customer - GST is applicable.

Revised GST Rates as per 55th GST Council Meeting

General Rate

Increased from 12% to 18% for all old and used vehicles, including EVs.

Exceptions at 18%

No change for:

Petrol vehicles with engine ≥1200 cc and length ≥4000 mm.
Diesel vehicles with engine ≥1500 cc and length ≥4000 mm.
SUVs.

Exemption

GST does not apply to sales by unregistered persons.

Click here to know more about GST on used vehicles

FAQ :

The Marginal Scheme, as per Rule 32(5) of CGST Rules, 2017, means that the value of supply for GST purposes is the difference between the selling price and the purchase price. If this difference is negative, it is ignored and no tax is applicable.

No, if an individual sells used cars to friends or relatives, GST is not applicable.

No, GST is not applicable if an individual sells a used car to a dealer.

GST is applicable when a dealer sells used cars that they have purchased from individual customers to a new customer. The general GST rate for these sales has increased from 12% to 18% for most old and used vehicles, including EVs.

Yes, the 18% rate does not apply to petrol vehicles with an engine capacity of 1200 cc or more and a length of 4000 mm or more, diesel vehicles with an engine capacity of 1500 cc or more and a length of 4000 mm or more, and SUVs.

No, GST does not apply to sales made by unregistered persons.

863 Views 1 Likes Comment Share GST Report

About the Author

Mitali

Finance Professional

I write about Income Tax, GST, TDS, RBI updates, government schemes, and personal finance in India. My focus is on simplifying complex tax and compliance topics into easy-to-understand guides that help readers stay updated with the latest financial rules, investment options, and regulatory changes.

View Articles

Comments :

GST on Old and Used Vehicles: Does Selling a Used Vehicle Attract GST for all individuals?

For this let us first know what is a Marginal Scheme