GST on Sale of Used and Old Cars:
In order to make used cars more affordable, the GST Council announced a reduction in the tax rate on Old used vehicle transactions in its meeting held on January 18, 2017. The tax rate on used old car transactions has been reduced to 18 percent for large cars and SUVs, and 12 percent for small vehicles, from 28 percent (for both categories) earlier. The new rates have come into effect from January 25, 2018.
Government has issued Notification No. 8/2018 Central Tax Rate read with State Tax Rate Notification & Notification No. 1/2018 Compensation Cess Rate reduced the Rate of GST & exempted the Cess on old and used vehicle as follows:
1. GST-18% on Old and used, petrol Liquefied petroleum gases (LPG) or compressed natural gas (CNG) driven motor vehicles of engine capacity of 1200 cc or more and of length of 4000 mm or more. (HSN: 8703)
2. GST-18% on Old and used, diesel driven motor vehicles of engine capacity of 1500 cc or more and of length of 4000 mm (HSN: 8703)
3. GST-18% on Old and used motor vehicles of engine capacity exceeding 1500 cc, popularly known as Sports Utility Vehicles (SUVs) including utility vehicles (HSN: 8703)
4. GST-12% on All Old and used Vehicles other than those mentioned from S. No. 1 to S.No.3 (HSN: 87- Others)
Note: Government also Exempted the Cess applicable on sale of Used vehicle through Notification No. 1/2018 Compensation Cess Rate.
Valuation of Old or Used car for GST Calculation
Value on which GST at above rates to be calculated shall be Margin of Supply which is to be calculated in the manner as mentioned in Notification which is given below:
| Sr. No. | Particulars | Margins of Supply | |
| 1 | in case of a registered person who has claimed depreciation under section 32 of the Income-Tax Act, 1961(43 of 1961) on the said goods | Consideration Received (-) Depreciated Value (WDV) | # # |
| 2 | In any other case | Selling Price (-) Purchase Price | # # |
## If the difference is Negative then GST shall be ignored.
This notification shall not apply, if the supplier of such goods has availed input tax credit as defined in clause (63) of section 2 of the Central Goods and Services Tax Act, 2017, CENVAT as defined in CENVAT Credit Rules, 2004 or the input tax credit of Value Added Tax or any other taxes paid, on such goods.