GST on sales of Old Motor Vehicles

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This discussion clarifies the GST implications when selling old motor vehicles, specifically lorries, where Input Tax Credit (ITC) has been claimed. Experts confirm that if ITC was availed on the vehicle, the normal GST rate of 28% plus applicable Compensation Cess applies, and the quarterly exemption notification is not relevant. Importantly, you can sell the vehicle at its current market value (e.g., Rs. 4.5 Lacs) without needing to reverse the previously claimed ITC.

Rakesh Sharma

Rakesh Sharma (Querist)
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04 May 2021 Respected Experts,
We have purchased 2 Lorry, 1 before GST regime and 2nd after GST regime.

In case 1, we have taken ITC of Excise Duty & VAT.
In case 2, we have taken ITC of GST.

Should we calculate Taxable value by considering Notf. No. 8/2018 dtd. 25-01-2018 or we have
to calculate Taxable value after deducted per quarter exemption i.e. 2.5% per quarter.

Kindly suggest.

Rakesh Sharma

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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05 May 2021 The above notification not applicable in view of ITC availed.
In case a person was eligible to avail and has in fact availed input tax credit on motor vehicle which he is now selling, normal GST rate of 28% plus 17% / 20% / 22% towards Compensation Cess, as applicable need to be charged and paid on sale of such motor vehicle.

Rakesh Sharma

Rakesh Sharma (Querist)
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05 May 2021 Sir, we are manufacturer and want to sale old lorry on which we have taken GST. What will be the tax rate, also can we claim quarterly exemption i.e. 5% per quarter. Please advise Sir.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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06 May 2021 It's 28% plus cess given above in view of ITC availed.
No quarterly exemption.

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Rakesh Sharma

Rakesh Sharma (Querist)
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06 May 2021 Thanks a lot Sir for your valuable reply. One more thing I want to know that can we sale the Lorry for Rs. 4.5 Lacs as per its condition, purchase value was Rs. 19.10 Lacs and used period about 4.5 Years or we have to reverse all the taken ITC. Waiting for your valuable & ultimate reply Sir.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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07 May 2021 Yes, you can sell it for 4.50 lacs no need for reversal of ITC.

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