email@example.com 23 September 2020
A Company purchased a car for its business purpose in the year March 2018. The Company has not availed GST Credit on purchase of car. The company has claimed depreciation under Income Tax Act. Now the company intends to sale the car. The company is availing the benefit of notification no. 8/2018 CTR i.e., margin scheme for sale of used and old car.
The said notification provides that the taxable value shall be the difference between Sale consideration (minus) depreciated value of such goods on the date of supply.
Say for example: The cost of the car was Rs. 3 Lakhs on which GST @ 28% & Cess @ 1% was levied. The total cost of the car with GST taxes was Rs. 3,87,000/-. Apart from these, various other charges such as road tax, insurance, warranty etc., was charged, value of which say was Rs. 1,00,000/-. The total cost of the car is Rs. 4,87,000.
So, there are three value (i) Rs. 3 Lakhs which is the price of the car (ii) Rs. 3,87,000/- which is the price with GST and (iii) Rs. 4,87,000/- which is the price of car + GST + other charges.
The company would obviously capitalize the value as 4,87,000/- in the books and claimed depreciation under Income Tax on the said amount.
The Notification 8/2018 CTR uses the phrase depreciated value of such goods on the date of supply.
What does this phrase means. Should I calculate depreciated value of goods based on Rs. 3 Lakhs or Rs. 3.87 Lakhs or Rs. 4.87 Lakhs?
prasad Nilugal 23 September 2020
You can not capitalise GST and other taxes in Historical value of Asset Rs 300000/-, however. you can capitalise other expenses at time of purchase with cost 300000/-
So you your Depreciated value will be Cost + expense - deprecated value till the date of supply .
please confirm with others also .
prasad Nilugal (Sr . Accountant and GST Practitioner . ) 23 September 2020
Sorry please make some corrections to above as follows
So your Depreciated Value will be = Cost + expense ( Not to include Taxes ) - Depreciation from 2018