GST On Resale Vehicles But Don’t Panic

The recent GST council meeting resulted in some crucial decisions that are creating debates on social media. After the tax on popcorn, the GST on the resale of used vehicles has taken the citizens into a panic mode. However, for private individuals, there is nothing to worry about. The GST on resale vehicles will be applicable to registered dealers and not private individuals.

The GST council announced its decision to increase the tax rate on used vehicles from 12% to 18%.

“It is on that margin value; between the purchased price and the resale price, we will apply the GST. If you purchase a vehicle for 9 lakh rupees, and resell it for 3 lakhs, the GST will be applicable on that margin value between the purchased price and resale value. It is on the margin and not on the entire amount,” said Nirmala Sitharaman.

This has triggered the panic mode in a lot of citizens but this is applicable for the used car dealers who make profits. It is true that the used cars business is big in the country and these dealers will now be at losses.

The GST revision applies to vehicles sold by businesses that claim depreciation and transact on a margin basis.