GST Impact on Sale of Used Motor Vehicle

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When selling a used motor vehicle purchased with Input Tax Credit (ITC), GST is generally applicable. The tax is levied on the 'margin of supply', which is the profit made on the sale, rather than the full sale value. Specific GST rates apply depending on the vehicle's engine capacity, length, and fuel type, as outlined in Notification No. 08/2018.

SUDHEEP M

SUDHEEP M (Querist)
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25 October 2021 Sir, I want to know the GST Implication on the sale of used motor vehicle. I was purchased goods vehicle 5 years before which are eligible for availing ITC and the same was availed in the books. Now I sold the vehicle at a profit. Now I want to know whether GST was liable on the Sales Value or on the Margin Value (Sale value - written down value). If it makes any difference if I sold the vehicle within a period of Five years.

Gokul Sharma

Gokul Sharma (Expert)
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25 October 2021 you should have to pay gst on sale value.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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28 October 2021 Notification No. 08/2018 – Central Tax (Rate) dated 25th January 2018. The rates applicable is as follows –
Category of vehicle GST rate from 25/01/2018 (with conditions)
Petrol Vehicles with more than 1200cc engine capacity & 4000mm length 18%
Diesel Vehicles with more than 1500cc engine capacity & 4000mm length 18%
SUVs (including utility vehicles) with more than 1500cc engine capacity 18%
Vehicles other than those mentioned above, other vehicles under chapter 87 12%
Value on which the reduced rates shall be applicable –
The above-stated notification also provides the mechanism to calculate the value on which GST shall be levied. As per the notification, the Value of Supply shall be the “Margin of Supply” on which GST shall be calculated.

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