The Goods and Services Tax (GST) on used vehicles will depend on the selling enterprise's nature of business, officials and experts clarified. That would mean the tax will be different for enterprises which use cars for their business operations from those that use them as stock in trade or as inventory—for example, a used car dealership.
The GST Council last week recommended harmonizing the tax rate on used cars at 18%, which meant the rate for used small cars, including electric vehicles moved up from 12%. It applies only on the margin of the selling enterprise.
GST is not applicable if one individual sells it to another.
An official explained that in cases where businesses with GST registration have claimed depreciation under the Income Tax Act, the margin on the sale on which GST is applicable would be the difference between the selling price and the depreciated value of the car.
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