GST on Sale of Car

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This discussion clarifies GST implications when a company sells an old car, especially if Input Tax Credit (ITC) was previously claimed. The key factor is whether depreciation was claimed under the Income Tax Act. If depreciation was claimed, GST is charged on the difference between the selling price (£3 Lakh) and the Written Down Value (£50,000), which is £2.5 Lakh. If no depreciation was claimed, GST is calculated on the difference between the selling price and the original purchase price.

Vivek Sunil Mule

Vivek Sunil Mule (Querist)
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07 January 2020 Respected Sir / Madam,

My company is selling old car on which ITC has been availed.
Company business is altogether different and not dealing in sale and purchase of cars.
Sale Value is 3Lakh
WDV is 50,000

What will be the value on which GST to be charged whether it should 3 lakh or 2.5 lakh ? and how to mention in Invoice.

CA Anita Bhadra

CA Anita Bhadra (Expert)
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07 January 2020

ITC on motor car is blocked credit w.e.f. 01 July 2017 , How could company availed ITC ?

Vivek Sunil Mule

Vivek Sunil Mule (Querist)
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07 January 2020 Sorry,
ITC has not been availed

CA Anita Bhadra

CA Anita Bhadra (Expert)
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07 January 2020 Vide Notification 8/2018- Central Tax (Rate) dated 25 January 2018, the margin scheme was made applicable to all taxpayers on the sale of motor vehicle held as capital asset. As per Margin Scheme :-

In case your company has claimed depreciation as per the Income Tax Act, 1961, GST has to be paid on the excess of selling price over the written down ( Rs 2,50,000/-)

Where no depreciation has been claimed, GST will be paid on the difference in the selling price and the purchase price.( 3,00,000 less purchase price )

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Vivek Sunil Mule

Vivek Sunil Mule (Querist)
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07 January 2020 Ok
Thank you Madam.

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