Pradeep Jain - Chartered Accountant

Query

(Aashish jain) Posted On: 18 Aug, 2020

A company has purchased the car prior to GST regime. The company has not availed Cenvat credit or Vat credit on the same. Now the company wants to sell the car. What should be the taxable value for the sale of car. Should the taxable value be WDV of the car as per Income Tax Act or WDV as per books of Accounts? Also enlighten what should be the GST rate on the sale of car? Is the notification no. 37/2017 relevant here or should we refer to only notification 8/2018?

First come to the question of applicability of rate of GST on sale of car, Notification No. 8/2018 ? Central Tax (Rate) shall be applicable. We shall summarize the applicability of GST Rate in the following tabular manner :- Category of vehicle (Based on notification no.01/2017 & 08/2018) ? CT (R) GST rate up to 25/01/2018 GST rate from 25/01/2018 (with conditions) Petrol Vehicles with more than 1200cc engine capacity & 4000mm length (HSN 8703) 28% 18% Diesel Vehicles with more than 1500cc engine capacity & 4000mm length (HSN 8703) 28% 18% SUVs (including utility vehicles) with more than 1500cc engine capacity (HSN 8703) 28% 18% Vehicles other than those mentioned above, including other vehicles under chapter 87 28%/18%/12%* 12% The conditions which need to be satisfied are that the vehicle is to be purchased prior to GST Regime and CENVAT or VAT credit shall not be availed which are being very well satisfied as the situation given in Query. As already answered in our earlier query, the tax will be payable under margin scheme. Now moving forward to next question- whether the WDV as per income tax Act or WDV as per books of accounts is to be considered? This has been answered in the Notification no. 8/2018 itself. The relevant portion is being reproduced below for your reference. ?Explanation ?For the purposes of this notification, - (i) in case of a registered person who has claimed depreciation under section 32 of the Income-Tax Act,1961(43 of 1961) on the said goods, the value that represents the margin of the supplier shall be the difference between the consideration received for supply of such goods and the depreciated value of such goods on the date of supply, and where the margin of such supply is negative, it shall be ignored; and? This explanation makes it clear that WDV as per Income tax Act is to be considered. Further abatement @35% will be available if it is purchased before GST regime and sold before 31.07.2020 as per notification number 37/3017-Central Tax(Rate) dated 13.10.2017.

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