Furthermore, for the purposes of the Luxury Car Tax Act, if an entity is not entitled to quote an … Please write to [email protected] or call our team at +919971022252 for further details. I am an individual and I provide crane service and I purchase a crane. You should use the Discounted Sale Price Scheme and charge GST on 50% of the selling price of the used vehicle. The lowest GST rate applicable to vehicles is 5% which is applicable to carriages (motorized/non-motorized) for use by disabled persons. Yes, you are required to charge GST on the sale of your company vehicle even though you did not claim GST on the purchase of the vehicle. The term supply has been defined under Section 7 … GST is a tax on supply of goods or services. The motor vehicles (other than special purpose motor vehicles such as cranes etc.) what i have read is-Where the govt. The vehicle will be used approximately 60% for business use, and 40% for personal use, so the ITC is based on the capital cost allowance for the vehicle at the end of each year. 13-10-2017 in case of used vehicles, supplied by Central Government, State Government, Union territory or a local authority, the registered person receiving the supply is liable to pay tax under reverse charge. Such dealers can supply the goods as such or after minor processing which does not change the nature of such goods. I am registered for Gst and have just started to trade again but will show no income for this financial year. depreciated purchase price. This normally means you won't be able to claim GST on the purchase. The supplier of goods is paying GST on the price of lignite including transport charges. Prior to implementation of GST w.e.f. Accordingly the margin of supplier will be Rs 6875/- ( Rs 4,00,000/- minus Rs 3,93,125/- ) on which concessional rate of GST @ 18 % or 12% as the case be would be applicable. If exemption limit is breached then such person need to obtain GST registration and pay GST on supply of old car. Here even though the sale of old car by an individual is for a consideration, it cannot be said to be in the course of furtherance of his business, and hence does not qualify to be a supply per se. In case a used car is sold by any individual for purchasing a new car or otherwise and such individual is not engaged in business of buying and selling cars. Budget 2021: A new condition introduced to avail Input Tax Credit. In this article we shall deliberate upon the GST treatment on sale of old and used motor vehicles / cars under various situations. Section 17 (5) of CGST Act provides for denial of the input credit on motor vehicles and other conveyances except when they are used, i) for making the following taxable supplies, namely:—, (a) further supply of such motor vehicles or conveyances ; or. Note: Government also exempted the Cess applicable on sale of Used vehicle where input tax credit / Cenvat Credit has not been availed, vide  Notification No. For the first line please read the following : The rate of tax at 5% is applicable only in case ITC is not availed and therefore, you can not claim ITC. However, If ITC is not claim , then GST is on Profit Margin (Sale – Purchase) For any questions, you may reach us at Discussion Forum. The input credit against such taxes and duty was not available, except under some specific instances, to the manufacturers, traders, works contractors, job-workers and the service providers others than service for transport of goods and/or passengers (collectively referred to herein as “the business entities”, The provisions related to input credit under GST law are similar to that of old regime. In order to submit a comment to this post, please write this code along with your comment: 2f95ed3762ac0c01a6df54418b1cf57b. ITC is not available where composition scheme is available. In case under Illustration 1 , X Ltd had not availed depreciation as per Income Tax the margin of supplier would be Rs 2.50 lakhs ( selling price) minus Rs 5 lakhs (purchase price) which being negative will be regarded as NIL and thus no GST is payable as value of supply is NIL. If you use a motor vehicle solely in carrying on your business and you're registered for GST, you’re generally entitled to claim a credit for the GST included in the price of the vehicle, provided you have a tax invoice. You divide a GST inclusive cost by 11 to work out the GST component. GST being an ad valorem tax, in cases where GST is applicable on supply of old vehicles, we need to determine the value of supply, on which applicable GST rate shall be applied to find out the GST payable. It is important to note here that it should be ensured that in order to continue to avail benefit of threshold exemption limit, such sale of car should be an Intra-State supply i.e. Disclaimer:The article or blog or post (by whatever name) in this website is based on the writer’s personal views and interpretation of Act. 17% for cars having engine capacity not exceeding 1500 cc, else 20%. However, the government has never considered this request fearing a loss in revenue. This will need to be recorded as an asset so that it appears on your financial statement. Sale of old and used motor vehicles / cars is very common transaction undertaken by persons who are registered under GST law as well as individuals who are not engaged in any business, but sell their old car in order to purchase a new car. Copyright © TaxGuru. As per Notification No. Can I still claim the gat content on the vehicle if I have minimal income claimed for last month of financial year. As in the above case the depreciated value comes to Rs 3,93,125/- while the selling price is Rs 2,50,000/- thus the margin for supplier is negative Rs 1,43,125/- , which shall be ignored and the value of supply for levy of GST will be NIL in this case. GST @12% (CGST + SGST or IGST) on All Old and used Vehicles other than those mentioned from S. No. increased tax payable without composition and also the possibility of full or partial increase in the rate, Your email address will not be published. Example of a New Vehicle Purchase. The purchaser can claim ITC on Purchase of Motor Vehicles only if he engaged in any of the following business: 1.Supply of other vehicles or conveyances, vessels or aircraft. Moreover, ITC on trucks does not … FAQs on quarterly filing of GSTR-3B and monthly payment of tax (QRMP Scheme), GST E-invoicing: Answers to 10 FAQs you should know, FAQs on Aadhar Authentication while obtaining GST Registration, FAQs on Registration and login on GST e-invoice portal, FAQs on blocking and unblocking of e-way bill generation facility in EWB portal, FAQs on how to opt for Composition Scheme. 3. The following are some key instances where GST rate on vehicles is 12%: Vehicles that are driven by electric motors (including 2 and 3 wheel vehicles) Further income tax law requires computation of depreciation on block of assets , but for the purpose of computation of margin as above , the depreciated value should be determined for the specific vehicle which is being sold. Rule 32(5) of CGST Rules 2017 provides special valuation in case of persons dealing in buying and selling of second hand goods including used vehicles. Changes of GST rate over a period of time: GST rate in case of old and used car was same as applicable on new car up to 25/01/2018. Will I be able to get Input Tax Credit on the GST paid on purchase of the Car. ITC of GST for purchase of motor vehicles in business other than that of provider of goods and/or passenger transport service. Further in such a situation you will also be able to avail input tax credit in regard to GST paid on Services of general insurance, servicing, repair and maintenance of said Truck. GST and motor vehicles. The GST council has increased the cess rate on larger and mid-sized cars in India. All about GST on sale of old and used motor vehicles, Don’t miss the next GST Update / Article / Judicial pronouncement, Temporary retention of GST cess fund in CFI pending reconciliation not diversion: Finance ministry, GST Registration: When required and how to obtain. GST on sale of Used Vehicles (Before 18/01/2018) – 28% (GST) + 15% (Cess) However, the GST Council, in its 25th meeting held on January 18, 2018, decided to cut tax rates on a number of products & services, including the sale of old and used cars. This vehicle we are using for business purposes only. Kindly advice me sir, I am.having a company I purchased d car on company name for company use can I get gst. my all service are taxable. In cases where sale of old motor vehicles is made by a GST registered person, without doubt such a supply will be taxable under GST Law and such a person needs to pay GST at applicable rates. 2. The consultants etc. 2.Transportation of passengers. To take a decision you need to compare the total amount of ITC forgone on other input and the ITC on Bus v/s. The accounting entries would be as follows: Debit: Van – $50,000.00; Credit: Cash – $50,000.00; But this is not all. There are rules concerning luxury car purchases, leased vehicles and purchasing second-hand. I am unsure of how to record the following purchase of a new vehicle including the trade in of the old vehicle and if I use CAP or GST. We purchase a CAR for our Co-Operative Society Member’s Use for Transportation Purpose? This calculator can help when you're making taxable sales only (that is, a sale that has 10 per cent GST in the price). If no input tax credit (ITC) has been availed on the purchase of such old vehicles, then GST may be paid by such dealer, only on the differential amount between the selling price and the purchase price (only purchase price, expenses incurred on minor processing will not be considered) and where such value is negative it will be ignored. For instance, goods or services purchased through online companies such as MailChimp, iTunes, Facebook, or Google Apps are from overseas suppliers and cannot be claimed. We provide high quality detailed written legal opinions on complex GST issues. We are eligible to take ITC ? GST @ 18% (CGST + SGST or IGST) on Old and used motor vehicles of engine capacity exceeding 1500 cc, popularly known as Sports Utility Vehicles (SUVs) including utility vehicles. Smaller cars with petrol engines upto 1200 cc and diesel engines upto 1500 cc have not been changed as expected. One of the ineligibilities is Motor vehicle purchased for purpose other than for renting out or further sale. Post that, GST rate on used vehicles sale was reduced and cess was removed from such supplies. GST amount of rate on Motor vehicles for the transport of ten or more persons business. GST Memorandum 8-2 sets the following limits for claiming HST ITC for a purchased passenger vehicle: ITC entitlement on passenger vehicles and aircraft Corporations can claim the full HST ITC if the passenger vehicle is used primarily (over 50%) for commercial activities. GST rate for tramway rolling stock and parts, Vehicles other than railway. is this eligible for INPUT GST CREDIT or NOT ? 1/2018 Compensation Cess (Rate) dated 25.01.2018, Resolve your GST queries from national level experts on GST free of cost. Vehicle Purchased & Sold in GST Regime : If ITC claim , then GST is on transaction Value . A reduction in GST will lower the upfront cost of vehicles, thereby acting as the necessary push towards improving sales during the ongoing unprecedented sales slump in the automotive industry. In such a case also, if sale price exceeds purchase price( which is next to possible), GST will be payable on above rates on such margin to supplier. Example: a self-employed person in British Columbia purchases a passenger vehicle in 2009 for $32,000 + 5% GST + 7% PST = $35,840. If you purchase a second-hand motor vehicle from someone who is not registered for GST and you are purchasing the vehicle to sell or exchange it, you may be entitled to claim a GST credit. It may be noted here that input tax credit on motor vehicles is generally blocked under Section 17(5)(a) of the CGST Act, 2017 and is available when such motor vehicle is used for further supply, transportation of passengers and imparting training of driving of such vehicles. The same 5% GST rate also applies to parts/accessories of carriages for use by disabled people. This lower rate was introduced at the 31 st GST Council Meeting held in December 2018. The. The Government had reduced the GST rate on old and used vehicles in cases where the input tax credit / CENVAT credit has not been availed in respect of the motor vehicles, vide Notification No. 4/2017-CT (Rate) dated 28-6-2017 amended vide Notification No. Sub 4-metre cars ; Petrol engines less than 1.2l: This is the most popular car segment in India with cars such as Maruti Suzuki Dzire, Hyundai Grand i10, Toyota Etios Liva, Volkswagen Polo among others, that have been levied with a GST rate equal to 29%, a … This requirement is still applicable even though you may have recorded the Singapore dollar value of the purchases in your own books at a rate of exchange different from that used by the supplier. How much you can receive The maximum value of the car is $59,136 including GST. 3. GST rate on sale or purchase of Electrically operated vehicles. As in majority of cases ITC is blocked for motor vehicles and thus no question of it being availed . What is the maximum GST claimable by the purchaser? Subscribe our portal and get FREE GST e-books , articles and updates on your e-mail. If the person opts for 18% scheme, the ticket price shall increase and customers will not pay that amount. There may be a situation where a person is engaged in any business and using the vehicle for business purposes , but due to its aggregate turnover being less than the threshold exemption limit of Rs 40 lakhs / Rs 20 lakhs / Rs 10 lakhs , has not obtained GST registration. In such case we need to determine depreciated value as per Income Tax. Notification No. It may be noted here that above special procedure is applicable only in cases where no ITC has been availed by the second hand goods dealer. However 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. If the car exceeds this amount GST is payable on the balance above $59,136. Buying from non-registered suppliers. No ITC was availed but deprecation as per Income Tax is availed. Purchase of Vehicle & GST Implications www.thetaxtalk - Since the GST law has came into force various notifications and amendment has been made on issue of old car sale. In other cases: Margin of Supplier shall be difference between selling price and the purchase price where the margin of such supply is negative, it shall be ignored. Ans: Yes, ITC can be availed as credit of only passenger vehicle is blocked under Section 17(5). A taxable sale must be: … 01/2017 Central Tax (Rate) up to 25/01/2018 and rates after 25/01/2018, which are reduced through the notification no. The term supply has been defined under Section 7 of the CGST Act,2017. Required fields are marked *, Notice: It seems you have Javascript disabled in your Browser. Budget 2021: GST Audit by professionals scrapped? As per clause (a) of sub-section (1) of Section 7 , in order to constitute a supply the sale should be made by a person in the course of furtherance of business. 2. The input credit against such taxes and duty was not available, except under some specific instances, to the manufacturers, traders, works contractors, job-workers and the service providers others than … Copyright Clearmytax. Such will be the cases where the car dealer buys old Car from individuals, which as discussed supra will not be subject to GST. All rights reserved. Purchasing a second-hand motor vehicle. The van cost $50,000 and your business paid cash for the van. 1 to No.3. 8/2018 Central Tax (Rate) dated 25.01.2018 the concessional GST rates as discussed by us above will be applied on the “Margin of the Supplier” which is to be calculated in the manner as mentioned in said Notification as given below: 1. However, it cannot exceed the HST on the $30,000 cost limit. She as a part of clearmytax.in heads a team comprising of Chartered Accountants and Advocates and plays a key role in our mission to disseminate GST knowledge to all. Subscribe to our newsletter from FREE to stay updated on GST Law. In case, the margin of the transaction is negative; dealers do not have to pay GST on the car. GST is a tax on supply of goods or services. Ministry of Finance. GST Compliance Calendar for the month of February, 2021, Union Budget , 2021: Amendment in GST Act(s) – At a Glance, Union Budget 2021: Direct Tax Proposals at a glance, Changes in GST law applicable from January 1, 2021 we should know, Services subject to reverse charge mechanism under GST Law : At a glance, All about reverse charge mechanism (RCM) under GST, GSTR-9 Annual Return: 10 key points you should know, 15 points to be taken care while conducting GST Audit, Can we avail ITC of CGST and SGST of other State, where we are not registered, ITC on Hotel Accommodation/Stay services under GST, GST: Lift is immoveable property – No ITC can be availed: AAAR [Read Order], How to discharge reverse charge liability of earlier years now: Can ITC be availed thereon, All about GST under RCM on Legal Services provided by Advocates, Concept of Aggregate turnover and its impact on GST Registration, GST under Reverse Charge Mechanism on Renting of Motor Vehicles, All about Input Tax Credit on Motor Vehicles under GST Law, Less: Deprecation @ 7.50% (being eligible to 6 months deprecation being used for less than 180 days), No depreciation under Income tax for FY 2020-21 as sold in this year. Generally, when you buy a specified motor vehicle from a GST/HST registrant (for example, a dealership), the GST/HST applies on the sale. Else such dealer can avail ITC and in such a case value of supply would be the actual selling price of the second hand car. 36/2017-Central Tax (Rate), dated 13-10-2017, w.e.f. Sir, Let’s assume that your business purchases a new van on January 1. PST is generally payable at the time the vehicle is registered with your Autoplan Broker. 8/2018 Central Tax (Rate) dated 25.01.2018 (similar notifications under other GST Act(s)), the Rate of GST applicable on sale of on old and used vehicle in such cases are as follows: 1. 9 (4) of CGST Act & 5(4) of IGST Act after recent Amendments, Common Maintenance Collected by Residents welfare Association and GST, Amount received for security services including amount of wages for guards taxable @18%, GST on ocean freight and scope of delegated legislation, Advisory on Reconciliation Statement (GSTR-9C ), Exclusion of small scale ice cream manufacturers from composition scheme benefit to be reconsidered by GST Council, Will exemption from ITR filing proposal for senior citizen will work, No Reopening On Borrowed Satisfaction Without Bringing Tangible Material on Record, HC directs DGFT Surat decide on removal of IEC code from denial entity list, Reserve Bank of India (Digital Payment Security Controls) directions, 2021, SC rules that Reasoned Judgements to be delivered along with Operative Orders, Section 153C: ITAT directs CIT(A) top examine recording of satisfaction, Model Financial Statements for Non-Corporate Entities, Mixed fund Presumption cannot be applied to Specific Purpose Loan, Submit Letter of Undertaking (LUT) for FY 2021-22 by 31.03.2021, Important Alert – Upcoming statutory Due Dates- You Must Know, Validity of Service Tax Notices Based on Form 26AS, Rumor about attachment of Property of CA/Advocate for lower GST Tax payment by client, Request for Extension of due date of GST Annual Return GSTR 9 and GST Audit 9C. 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