GST: The GST Council has revised the GST regulations regarding the sale of used vehicles. From now on, registered traders will be required to pay GST on the sale of used vehicles only if they make a profit (margin). This regulation will be enforced for all older vehicles, regardless of whether they are electric or powered by petrol-diesel.
GST rate will be 18%
The GST rate will be 18 percent, applied only to the margin rather than the full selling price. If an individual sells their used car to another person, GST will not be applied to that transaction.
The GST Council meeting held last week led to the decision to raise GST rates on used cars. Previously, various GST rates were imposed on various categories of vehicles. Specialists think that this may lower the costs of used electric vehicles. Let’s explore this change thoroughly.
This rate will not be applied to the full sales price
Previously, the GST rate on used vehicles fluctuated, leading to considerable confusion. Currently, the GST Council has established a uniform rate of 18% applicable to all old vehicles. However, this rate will be applied not to the full sales price, but to the profit (margin) of the sellers. Margin refers to the distinction between the selling price and the value post-depreciation.
Depreciation refers to the annual reduction in the vehicle’s price as outlined in Section 32 of the Income Tax Act, 1961. If a registered dealer sells a used vehicle and earns a profit, he will only need to pay GST on that profit. If he incurs a loss, he won’t need to pay GST.