The GST Council has really helpful an elevated 18% tax fee on the margin determine of used automobile gross sales which incorporates all electrical autos (EVs), together with specified petrol and diesel automobiles.
Automobiles which have a decrease engine capability and in addition a decrease size as talked about within the provisions will probably be taxed solely at 12% GST which is the present fee.(Representational Picture/Pixabay) Full particulars of recent used automobile GST coverage
The 18% GST slab applies to all electrical autos (EVs), petrol automobiles with an engine capability of 1,200 cc or extra or of size of 4000 mm or extra, diesel automobiles with engine capability of 1,500 cc or extra or with a size of 4000 mm or extra, and SUVs.
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Because of this automobiles with a decrease engine capability, as talked about above, and in addition a decrease size will probably be taxed solely at 12% GST, which is the present fee.
If the transaction is between particular person sellers whereby the vendor will not be GST registered, then the tax is not going to apply. This is applicable to all kinds of automobiles.
The GST Council has additionally not specified any new reverse cost legal responsibility, The Financial Instances reported.
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Whereas most companies can’t declare enter tax credit score (ITC) on the acquisition of a automobile even when it was purchased within the identify of the GST registered enterprise, automobile sellers with showrooms together with transporters can declare ITC on such purchases.
Nevertheless, the report quoted Chartered Accountant Bimal Jain, founding father of A2Z Taxcorp LLP, as saying that companies eligible for claiming enter tax credit score on automobile purchases should pay GST on the sale worth and never the margin.
Solely those that cannot declare ITC should pay GST on the margin, he added.
No GST needs to be paid if there’s a loss on sale of the car.
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Nevertheless, used automobile sellers can benefit from the ‘margin scheme’ if they don’t avail ITC, whereby they’re allowed to solely pay GST on the distinction between the sale worth and the acquisition worth or the depreciated worth of the automobile (if deprecation was availed), in line with the report.
Additionally used automobile companies can’t set off losses on different optimistic margins when the promoting worth is decrease than the acquisition worth.