Taxability under GST on old and used motor vehicles with notifications from 25-01-2018

AS we all know that regarding the taxability of old and used motor vehicles is a burning issue as prior to 25-01-2018 tax leviable on old and used car is on very high pitch but now with the notification no. 8/2018 Central Tax Rate read with State Tax Notification the rates are reduced which are as under:

SR. NO.	PARTICULARS	RATE OF GST
1.	Old and used, petrol Liquefied petroleum gases (LPG) or compressed natural gas (CNG) driven motor vehicles of engine capacity of 1200 cc or more and of length of 4000 mm or more.	18%
2.	Old and used, diesel driven motor vehicles of engine capacity of 1500 cc or more and of length of 4000 mm	18%
3.	Old and used motor vehicles of engine capacity exceeding 1500 cc, popularly known as Sports Utility Vehicles (SUVs) including utility vehicles.	18%
4.	All Old and used Vehicles other than those mentioned from S. No. 1 to S.No.3	12%

Following relevant notification can be downloaded:

Notification No. 8/2018 -Central Tax (Rate)

Notification No. 1/2018-CompensationCess (Rate)

APPLICABILITY

The rates mentioned in the above chart are applicable on the marginal value of the supplier.

EXEMPTION OF CESS

Beside the above relief Govt. has also exempted the Cess applicable on sale of used vehicle by issuing the notification no. 1/2018 Compensation Cess Rate.

REDUCTION OF RATE AND EXEMPTION OF CESS IS CONDITIONAL

Relief subject to condition that the supplier of such goods has not availed input tax credit as defined in clause 63 of Section 2 of The Central Goods & Services Tax Act, 2017 and Canvat Credit Rules 2004 or the input tax credit of Value Added Tax or any other tax/taxes paid on such goods

VALUATION

1.     Important thing to be noted is the margin of supply means thereby where the margin of supply is negative then no taxability and if there is a difference between purchase price and sale price (means margin on the positive side) then tax to be calculated on such margin.

DEPRECIATION

If depreciation is availed under Income Tax Act then margin of supply is to be calculated on the difference between the sale consideration and written down value if the same is in negative then no taxability and if the margin is on the positive side then the tax is to be calculated on such margin.