Sale of Vehicle GST Implication

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This discussion clarifies the GST implications for a GST-registered firm selling a vehicle. If the firm has claimed income tax depreciation, GST is applicable only on the margin between the sale price and the written-down value (WDV) as per income tax. If the sale price is less than the WDV, no GST is payable. From 22nd September 2025, a flat 18% GST rate will apply to the margin for older vehicles, and this is considered a forward charge, not reverse charge.

Neha

Neha (Querist)

04 June 2022 Sir/Madam
Please guide
Hatch Back Diesel Car (5seater) purchased by a GST registered Firm in 2009 Purchase Cost 3,25,000
sold to Unregistered Person for Sale Consideration 75,000. No Profit on sale of Vehicle.
What will be GST implication.
Will the Firm be required to deposit GST under reverse charge.
If Yes at what rate GST applies.

Thanks in Advance for your guidance

CA Altamush Zafar

CA Altamush Zafar (Expert)

04 June 2022 If the sale value is less than written down value as per income tax then no gst but if it's higher then gst payable on difference amount.

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

28 October 2026 No RCM: if the firm claimed income-tax depreciation, GST is only on the margin over the depreciated value (nil here, as the sale is below WDV); from 22-09-2025 the margin rate for old vehicles is a flat 18%.

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

28 October 2026 No RCM: it's forward charge by the firm. Under Notification 8/2018-CTR, where depreciation was claimed, GST is only on the margin (sale price minus income-tax WDV) and nil if negative; where the margin is positive, the rate is now 18% for all old and used vehicles after the 2025 rationalisation.

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