GST would be leviable only if this margin is positive, says a source. To illustrate it, he cites the example of a registered person who is selling an old and used vehicle to any person at `10 lakh, where the purchase price of the vehicle was `20 lakh. If the seller— being a registered person—has claimed depreciation of `8 lakh on the same under Income Tax Act, then he is not required to pay any GST as the selling price (`10 lakh) and the depreciated value (`12 lakh) of the car is negative. However, if the depreciated value in the above example remains the same at `12 lakh and the selling price is `15 lakh, then GST will be payable on the margin – 18% of `3 lakh.
It must be reminded that the GST Council recommended a uniform rate of GST on sale of all old and used vehicles including EVs at 18%. Currently, 18% GST is levied only on sale of old and used petrol vehicles of engine capacity of 1200 cc or more & of length of 4000 mm or more; diesel vehicles of engine capacity of 1500 cc or more & of length of 4000 mm and SUVs. Tax experts have also reiterated that only registered persons such as businesses involved in purchase and selling of old and used vehicles, etc, are liable to pay GST.
