used car dealer tax attration
This query is : Resolved
03 May 2010
mr.x is dealing in both new and used car, plz provide me with the taxes attracted by his business. thank you
CMA Ramesh Krishnan
(Expert)
04 May 2010
In the purview of Income tax it is Income from Business only. but let me know what exactly you required
Message likes :
1 times
04 May 2010
if Mr.x purchases & sales used & new cars, apart from incometax will his business be attracted by SERVICE TAX & MVAT also
02 August 2025
Here’s a quick summary of tax implications for Mr. X, who deals in both **new and used cars**:
---
### 1. **Income Tax**
* Income from sale of cars (both new and used) is treated as **Income from Business or Profession**.
* Mr. X should maintain proper books of account and declare profits accordingly.
---
### 2. **Service Tax**
* **Sale of cars** is generally considered a sale of goods, not a service, so **no service tax on sale of cars**.
* However, if Mr. X provides any **taxable services** (like repair, maintenance, commission agent services, or car rental), **service tax may be applicable on those services**.
---
### 3. **MVAT (State VAT or GST)**
* **VAT or GST is applicable on sale of cars**, both new and used.
* For used cars, VAT/GST is charged on the **sale price**.
* VAT rates depend on the state; earlier it was MVAT, now replaced by GST.
* GST on cars currently varies (e.g., 18% or 28% depending on car category).
---
### 4. **Other Taxes**
* **Excise Duty:** Not applicable on cars as they are finished goods.
* **Custom Duty:** Applicable if importing vehicles.
* **Other Local Taxes:** Like road tax, registration charges.
---
### Summary Table:
| Tax Type | Applicability on New Cars | Applicability on Used Cars |
| ------------ | ----------------------------------- | -------------------------------- |
| Income Tax | Business Income | Business Income |
| Service Tax | Only on services provided, not sale | Same as new cars (services only) |
| MVAT/GST | Applicable on sale | Applicable on sale |
| Excise Duty | Not applicable | Not applicable |
| Customs Duty | If imported | If imported |
---
**Note:** With the introduction of GST (Goods and Services Tax), service tax and VAT/MVAT have been subsumed under GST since July 2017.
---
If you want, I can provide a more detailed explanation with applicable GST slabs or help draft compliance checklists.
---
### 1. **Income Tax**
* Income from sale of cars (both new and used) is treated as **Income from Business or Profession**.
* Mr. X should maintain proper books of account and declare profits accordingly.
---
### 2. **Service Tax**
* **Sale of cars** is generally considered a sale of goods, not a service, so **no service tax on sale of cars**.
* However, if Mr. X provides any **taxable services** (like repair, maintenance, commission agent services, or car rental), **service tax may be applicable on those services**.
---
### 3. **MVAT (State VAT or GST)**
* **VAT or GST is applicable on sale of cars**, both new and used.
* For used cars, VAT/GST is charged on the **sale price**.
* VAT rates depend on the state; earlier it was MVAT, now replaced by GST.
* GST on cars currently varies (e.g., 18% or 28% depending on car category).
---
### 4. **Other Taxes**
* **Excise Duty:** Not applicable on cars as they are finished goods.
* **Custom Duty:** Applicable if importing vehicles.
* **Other Local Taxes:** Like road tax, registration charges.
---
### Summary Table:
| Tax Type | Applicability on New Cars | Applicability on Used Cars |
| ------------ | ----------------------------------- | -------------------------------- |
| Income Tax | Business Income | Business Income |
| Service Tax | Only on services provided, not sale | Same as new cars (services only) |
| MVAT/GST | Applicable on sale | Applicable on sale |
| Excise Duty | Not applicable | Not applicable |
| Customs Duty | If imported | If imported |
---
**Note:** With the introduction of GST (Goods and Services Tax), service tax and VAT/MVAT have been subsumed under GST since July 2017.
---
If you want, I can provide a more detailed explanation with applicable GST slabs or help draft compliance checklists.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Depreciation Chart Companies Act
- EPF ECR NEW FILE SEP 17TH 2026
- Capital Gail Exemption Certificate
- Oct 2025 Invoices
- Import of Software Service.
- SECTION 393(3) TAX ON CASH WITHDRAWAL
- Clarification Requested: Gift → NRO → NRE → Overseas Transfer - USA/CANDA (FEMA & Tax Compliance)
- Under marginal scheme
- Capitalgain tax purposes for valuation report compulsory
- GST on Renting godown to KFCSC for Storage of Raagi
- GST Audit whether Govt Companies are exempt?
- IMPORT PURCHASE ENTRY PASSED IN BOOKS OF ACCOUNT
- FAST DS 26 Undisclosed Foreign Asset Disclosure Scheme 2026
- Regime change
- Goods sold but invoice not issued
- Tally: Imported bank entries do not show up in manual reconciliation
- Sales of goods of amount Rs97 lakhs to a party
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- FAST-DS 2026 Under Tax Law - No recourse or support for person declaring via this scheme?
- Guidance Needed: Linking Multiple Form 26QB Payments and Responding to ITD Defaulter Notice
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
