GST TAX RATE ON USED CAR SALE & INPUT TAX CREDIT

Hello,

I am dealer engaged in USED CAR (HSN 8703) trading. I purchase USED Car from market and sell it to consumer after necessary renovation/repairing. I pay GST on Margin (Sale Value - Purchase Value - any additional cost incurred to make fit to sale). I have following queries.

1. Is GST Rate applicable 18% ??? if car cc is less than 1200(petrol) 1500 (diesel) than rate would be 12% as per Notification No. 8/2018 -Central Tax (Rate) dated 25/01/2018???

2. Can I claim ITC on parts/accessories purchased for car to use in such car to make it fit to saleable.???? (I do not take ITC on purchase of use car)

3. Is rate has been updated through any notification after said notification no 8/2018???

4. in gst return GSTR-01 & GSTR-03B car's purchase value is to be shown or margin ??? as Turnover will differ as per Income Tax Act and GST Act. Thus, Turnover Reconciliation issue rises here for both tax authorities. !!!!

Hey Alpesh! Let me clarify your GST queries on used car trading:

1. GST Rate on Used Cars (HSN 8703)

Standard GST rate on cars:
- 18% for most cars.
- However, as per Notification No. 8/2018-Central Tax (Rate) dated 25/01/2018, cars with engine capacity less than or equal to:
  - 1200 cc (petrol) or
  - 1500 cc (diesel)
    are taxed at 12% GST.
So yes, if your car falls within these engine capacity limits, 12% GST applies; otherwise, 18% applies.

2. Input Tax Credit (ITC) on Parts/Accessories for Renovation

Since you are paying GST on margin scheme, you cannot claim ITC on purchase of used cars (used goods under margin scheme are not eligible for ITC).
BUT for parts and accessories purchased separately and used for renovation/repair:
- You can claim ITC on those inputs if they are used for business and you have proper tax invoices.
- ITC is allowed on input goods/services used for furtherance of business.

3. Updates to GST Rate Notifications after No. 8/2018

No major changes superseding the notification for car engine capacity slabs for GST rate have been made up to date.
Keep checking latest GST council updates or official GST portal notifications to be sure.

4. Reporting in GSTR-1 & GSTR-3B Returns

Under the margin scheme, GST is payable only on the margin (difference between sale and purchase price).
In GSTR-1 and GSTR-3B:
- Sales Value reported = Sale price of car (not purchase price).
- GST is calculated and paid on margin.
Purchase value of used cars is not reported as inward supply for ITC (since no ITC is claimed on purchase of used cars).
This may cause differences in turnover between GST and Income Tax returns (Income Tax considers full turnover including purchase and sale).

Summary:

Query	Answer
GST Rate for Used Car < 1200cc/1500cc	12% GST as per Notification No. 8/2018
Claim ITC on Parts/Accessories	Yes, ITC can be claimed on parts/accessories
Rate update after Notification 8/2018	No significant updates till now
Reporting in GSTR-1 & GSTR-3B	Report full sale value; pay GST on margin only