GST on sale of used cars between B2B

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This discussion clarifies the Goods and Services Tax (GST) implications for business-to-business (B2B) transactions involving the sale of used cars between registered dealers. It explores whether GST should be charged on the profit margin or the entire sale value, considering the provisions of Rule 32(5) of the CGST Rules. The advice touches upon the eligibility for Input Tax Credit (ITC) and the different GST liabilities for both the seller (A) and the buyer (B) depending on the chosen tax method.

VVS TULASIRAM THOTA

VVS TULASIRAM THOTA (Querist)

14 February 2020 Hello,

A and B are two registered dealers and dealing with buying and selling of used cars. A is buying from unregistered dealers and selling to B. B is buying cars from registered dealers(A etc.) and selling to both registered and unregistered dealers.

My question is what is the GST implication on transactions between A and B, what is gst liability for A and for B.

Gokul Sharma

Gokul Sharma (Expert)

14 February 2020 in terms of Rule 32(5) of CGST Rules, GST needs to be charged on margin (i.e. sale price – purchase price). so A is required to discharge GST on margin earned on the vehicle.

but If the dealers are not availing any exemption through the notifications (not paying gst on the margins),then he would require to discharge GST on entire sale value at full tax rate, wherein he can avail the ITC on purchase of old and used car.

VVS TULASIRAM THOTA

VVS TULASIRAM THOTA (Querist)

14 February 2020 Hello Mr. Gokul Sharma,

Thanks for reply.

Can you please let the discharge of GST in terms of B

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