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
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