GST Update: Sell Old Cars At This Price To Avoid Tax – Center’s Latest Statement

GST on Old Used Cars: The central government has issued a detailed FAQ on how tax will be levied on old electric cars and other used vehicles, answering various questions from consumers.

GST on Sale of Old Car: The central government is facing criticism for imposing GST on the sale of old and used cars. On December 21, 2024, the GST Council decided to impose GST on the sale of old and used vehicles. This includes electric cars. Despite widespread criticism, the government has given a clarification three days later. The government has informed that if the margin on the sale of old cars is negative (GST), that is, if someone sells an old car at a loss for less money, then he will not have to pay any tax.

The central government has issued a detailed FAQ on how the tax will be applied to all other used vehicles, including old electric cars, where various questions of customers have been answered with examples.

What has been suggested for the sale of all used vehicles other than electric cars?

The GST Council has decided to impose 18 percent GST on all old and used vehicles, including EVs. The GST Council has not recommended any new tax.

Who will have to pay GST for the sale of old cars?

Only those who are registered in the business of used cars will have to pay this GST.

Do I have to pay GST even if I sell an old car to another person?

In this case, the person who is selling the car will not have to pay any GST.

Do I have to pay GST on the sale price of the old car?

If a person registered in GST claims depreciation under section 32 of the Income Tax Act 1961, then he will have to pay GST only on the supplier’s margin value. That is, GST will have to be paid on the difference between the sale price of the passenger car and the depreciated value. In this case, if someone sells the car at a loss, then no tax will have to be paid.

If a person sells his used old car, which he bought for 20 lakhs, to someone else for 10 lakhs, and claims depreciation cost of 8 lakhs under the Income Tax Act, in that case he will have to pay the supplier’s margin, no GST will have to be paid. If the depreciated value is Tk 12 lakh and the selling price of the car is Tk 15 lakh, then the supplier will have to pay 18 percent GST on a margin of Tk 3 lakh. And if a person wants to sell a car purchased for Tk 12 lakh for Tk 10 lakh, then no GST will be payable.