GST on used cars will impact dealers/online platforms
And in turn prices for consumers who buy from such platforms
Let me clear some myths on GST on used cars.
Example 1:
You buy a car for 15 lacs. Use it for 2-3 years and sell it to a random individual for 10 lacs. NO GST is applicable on sale price.
Example 2:
You buy a car for 15 lacs: use it for 2-3 years and sell it to a used car company for 10 lacs. No GST is applicable to this transaction as well.
Story begins here.
This used cars dealer now sells this car ahead for 11 lacs. Then the margin is 1 lac and Government states this amount is taxable as a service.
Now onto my thoughts:
GST council has made a big error in this. Entire 1 lac cannot be a service component because dealers usually
1. Repair the car.
2. Install some accessories
3. Service the car.
4. Hold the car for a longer period of time to find a buyer. (Sale price will have inherent interest cost because he has already paid you full amount)
5. The value addition being done is based on parts etc on which GST is already paid off.
6. The asset is depreciating asset and there cannot be tax on that at all in my opinion.
The GST council needs to rethink on this at the earliest.
Also, ppl like us commoners have should full understanding of the above scenarios, hope my detailed explanation helps! more
Let me clear some myths on GST on used cars.
Example 1:
You buy a car for 15 lacs. Use it for 2-3 years and sell it to a random individual for 10 lacs. NO GST is applicable on sale price.
Example 2:
You buy a car for 15 lacs: use it for 2-3 years and sell it to a used car company for 10 lacs. No GST is applicable to this transaction as well.
Story begins here.
This used cars dealer now sells this car ahead for 11 lacs. Then the margin is 1 lac and Government states this amount is taxable as a service.
Now onto my thoughts:
GST council has made a big error in this. Entire 1 lac cannot be a service component because dealers usually
1. Repair the car.
2. Install some accessories
3. Service the car.
4. Hold the car for a longer period of time to find a buyer. (Sale price will have inherent interest cost because he has already paid you full amount)
5. The value addition being done is based on parts etc on which GST is already paid off.
6. The asset is depreciating asset and there cannot be tax on that at all in my opinion.
The GST council needs to rethink on this at the earliest.
Also, ppl like us commoners have should full understanding of the above scenarios, hope my detailed explanation helps! more
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GST is applied on whole price of the service and not on the profit. Holding period may be there in selling new cars or any other commodity. However deduction should be admissible on a/c of GST paid on the accessories. more
Dec 24
vehicle resale by dealer has a system of accounting such old cars under different entity and hence any value addition , if needed to be done , will be added in their landing cost. Ultimately any sell value addition / profit will attract TAX as being in every brand new product of every sector. I hope this will clear doubts. more
Dec 24
Industry experts warn that the GST rate hike may lead to higher overall taxation on second-hand vehicle sales, potentially slowing down the growth of the used car market. This could deter potential buyers, affecting sales volumes and profitability for dealers and online platforms. A higher tax on used cars could incentivize consumers to consider purchasing new, fuel-efficient, or electric vehicles instead, which often have tax benefits and contribute to reducing environmental pollution. The policy aligns with global trends promoting sustainability and reducing emissions from older vehicles. more
Dec 24
GST Council does not understand basic principles of taxing. Whatever proposals are put before them by Babus are accepted. The recent example is the three rates of GST on popcorn being justified in the parliament by FM. more
Dec 24
GST council has lost all sanity and does not have a basic idea ofwhat they are doing and taxing without knowing the implications.GST on insurance reductions they cannot address and only think of how to hit the common man hard and big ticket items used by affluent is not thought of since they also belong to the affluent class and cannot do anything for the common man.Unless there is a representation from the common man in the gst council one cannot expect them to do anything useful and also FM is also not very strong to give directions in that direction unless PM gives them the direction otherwise they are lost and nothing concrete has come out of the meetings more
Dec 24
