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-   -   Used car GST rates slashed from 29 - 54.7% to 12 & 18% (https://www.team-bhp.com/forum/indian-car-scene/194596-used-car-gst-rates-slashed-29-54-7-12-18-a.html)

Before the budget of 2018 is presented, the GST council has announced that used cars will now be taxed at 18% and 12% for large and small cars respectively, down from the current 29-54.7% (including cess). These rates will be effective from January 25.

In the 25th meeting of the GST council that took place on January 18 in Delhi, the GST rates on over 29 different items were reduced. Further, the cess applied on top of the GST rate for used cars was also removed. This means that the earlier rates inclusive of cess have now been reduced significantly. The council also discussed on ways to simplify the GST filings in the future.

Currently, the used car dealers are paying the GST + cess amount on their margins when selling the car. This had made the tax on used cars even higher than what it was when only VAT was levied. The GST Council's announcement will come as a welcome relief to the organized sector in the used car business. Before this announcement, used cars were categorized in the same segment of new cars, which attracted steep rates of 29-54.7% depending on the vehicle.

In case of individuals selling their cars to other individuals or dealers, no GST is applicable but when dealers sell the car to individuals or dealers, GST is applicable on the margin amount. The council also reduced the rates on bio diesel, public transport buses that run on green fuel as well as environment friendly bio-fuels. The finance minister Mr. Arun Jaitley also told that the e-way bill is on track to be implemented from 1st February 2018.

GST was introduced in April 2017 to simplify the taxation and reduce the multiple levies on products as well as services. Motor vehicles were placed in the highest slab and luxury cars attracted an additional cess over the GST rate.



Source - TOI

Link to the Team-BHP News

Well that's good news indeed. Not that the impact of double taxation goes but atleast there is clarity now. Earlier cars were sold with VAT @ 5% atleast here in UP and used car buyers never pay any tax so its usually inbuilt in the used car price but with GST and its hap hazard tax structure it had possibly completely stopped companies/corporates from selling their vehicles. Even my company which was looking to sell of one of its vehicles had to put it on hold as the tax impact was a cool 43% including cess.

What really gets to me is that when no input credit is allowed right from the purchase of the car to the expenses incurred on running the car i.e. the service costs etc. why must the govt. re tax on the sale of the car too? Its just a case of exploitation of the corporates. So much for make in india when the entities responsible for make in india happening are being exploited left right and centre!

What about those who sold their car before the reduction in rates - can they claim any benefits?

If i own a car and i sell it to any other personal buyer, say other T-BHpian for Rs 3 Lakhs (Just assume, don't ask me which car & all :P), he pays me full amount by cheque, where GST comes into picture? In this transaction still I or buyer need to pay any GST? If yes, how much ?

This is application only for dealers not individual sellers. And even for dealers, the GST is on the margin money.

I don't think you can. As the rates a valid from 25th Jan, all transactions upto that time will be at old rate. Reverse is also true, incase of a rise, do you pay extra just because the tax rate is now more than what you paid?

As shivasi has said, only the dealers (that too the organised ones) will benefit a lot. Smaller dealers would always show sale/resale as a transaction from individual to individual to get out of paying taxes.

There is no GST on individual sellers. This is of most impact mostly on company owned cars. Even registered dealers have a margin scheme applicable which resulted in only GST being paid on margin money earned by them. A company had the vehicles shown on the books on which it claims depreciation and is an asset so when any car is sold it needs to reflect in the books by removal of that asset and to remove anything from the books a bill has to be raised which is why earlier VAT and now GST needs to be charged.

Small correction - Input credit on repairs/ maintenance/ servicing etc.. is allowed. I am claiming ITC on GST on insurance premium also.

Here is the tweet from GOI GST official twitter handle :)

+1, we are also claiming. We have to sell one car in near future and I am not sure what is to be done, checked with many car dealers locally & everyone is ignorant of GST on old car sales and they showed multiple transactions of corporates without any Invoice.

IF you are an individual, if sale price is more than INR 20 lakhs or you end up selling multiple cars totaling for more than INR 20 lakh, you would be liable for GST

It's incredible how the ones in charge are willing to accept their mistakes and make corrections. I love GST, and I love these forward-thinking steps even more. It's going to give a boost to the used car market, especially organised players like Maruti True Value, Mahindra First Choice & gang who can't work around the system like a small time dealer will.

Have you ever tried getting money back from the government :).

:thumbs up well said.

Correcting mistakes - yes, but the question is who, what and how much is broken in between the mistake and correction.

Reforms - yes, but here the question is how much thought is given before implementing them.

It's not the common people who are taking decisions about themselves or their family, but 'educated' and 'responsible' people ruling the country. A thorough study and understanding is needed before implementing those - whether it is demonitisation, GST or hiking / lowering taxes at their will.

What about the hybrid policy?
What about the all-electric-by-2030 talk (then quick reaction by manufacturers) and then backtrack?
What about bs-6 implementation?
What about Petrol-Diesel pricing strategy?
What about the 10 year life period for diesel vehicles?

For common people, it's their hard earned money disappearing in a moment. For corporates, it's huge investments and possible huge losses.

Governance decisions have to be well-thought-out, and should not be like the quick political decisions.

Too Many hiccups that should have been ironed out even before implementation. The rules change on a daily basis and the small businessman is hit by a new change everytime he manages to steady his feet.

GST 18 % is Mandatory on Sales of corporate registered Cars or Beyond 20 Lac in case of Individual

Had a lengthy discussion with multiple people today. Everyone now seems to have a clear idea and consensus, GST will be applicable on sale of Old cars. In case of corporate sales (Anyone who is the registered owner and also registered under GST) or in case of individuals with annual sales of any old car/ cars more than 20 Lac in a FY.

I believe this will severely impact old car sales as people understand implications.

Also think about what will happen if a corporate wants to buy a used car from an unregistered individual?!! Reverse charge mechanism has been suspended right now, but likely to be reinstated soon. So under RCM, 18% GST will be applicable on purchase with no input credit either. Sell this used car, pay 18% again. Sadly people at the helm don't seem to be able comprehend all issues involved. There is just too much chopping and changing going on. All they need to do is involve some senior tax practitioners and industry insiders and discuss the issues faced and come out with clear legislations.

This is just one example. There are thousands of cases like this. GST is turning into one big mess with everyone making their own interpretations. Assessees are confused, tax practioners are confused and Govt. tax departments are totally clueless. Govt. has a big job on its hands to get things back of track. It will be very interesting to see how assessments and audits will take place at the end of the year.