Old Car Dealers are those businessman who are in the business of purchase & sale of Preowned or Used Cars. Under GST Regime, the question of GST Taxability arises. Most of the dealers are of the view that whether the GST is taxable on the Sale & purchase consideration of the used cars or at the margin earned by them.
In this regard, the Central Government has issued the Notification No. 8/2018 - Central Tax dated 25-01-2018, where they have specified the goods as mentioned below along with Tax Rate:
Now coming to the Valuation of Transaction for the purpose of GST Levy. It is clarified in the Explanation to the said notification as follows:
1. Where the depreciation is claimed under Income Tax Act on the purchase of Used Car, than the margin for the purpose of GST Taxability shall be the difference between the consideration received and the depreciated value of asset as per Books of Accounts, and where the margin of such supply is negative, it shall be ignored; and
2. In any other case, the value that represents the margin of supplier shall be, the difference between the selling price and the purchase price and where such margin is negative, it shall be ignored.
Thus it is cleared from the above discussion, that GST is leviable on Used Car Dealer or Old Car Dealers on the margin only.