Recent media reports have stirred up confusion regarding the application of Goods and Services Tax (GST) on the sale of used vehicles, particularly after the GST Council's announcement of an 18% tax on used electric vehicles (EVs). Many misunderstood this to mean that individuals selling their old cars would also be liable for GST, even if selling at a loss. However, this is not the case!
To make it easier, here’s a breakdown of the GST rules for individual sellers and registered dealers:
๐๐ผ๐ฟ ๐๐ป๐ฑ๐ถ๐๐ถ๐ฑ๐๐ฎ๐น ๐ฆ๐ฒ๐น๐น๐ฒ๐ฟ๐
• ๐ก๐ผ ๐๐ฆ๐ง ๐ผ๐ป ๐ฃ๐ฒ๐ฟ๐๐ผ๐ป๐ฎ๐น ๐ฆ๐ฎ๐น๐ฒ๐: If you’re selling your used car as an individual to another individual, GST doesn’t apply. Personal transactions remain tax-free.
• ๐ก๐ผ ๐ฃ๐ฟ๐ผ๐ณ๐ถ๐, ๐ก๐ผ ๐๐ฆ๐ง: If you sell at a loss, you’re in the clear. GST comes into play only if there’s a profit margin (i.e., when the sale price exceeds the depreciated value of the car).
๐๐ผ๐ฟ ๐ฅ๐ฒ๐ด๐ถ๐๐๐ฒ๐ฟ๐ฒ๐ฑ ๐ฆ๐ฒ๐น๐น๐ฒ๐ฟ๐
• ๐๐ฆ๐ง ๐ผ๐ป ๐ฃ๐ฟ๐ผ๐ณ๐ถ๐ ๐ ๐ฎ๐ฟ๐ด๐ถ๐ป ๐ข๐ป๐น๐: For businesses or dealers registered under GST, the tax applies only to the profit margin. This means GST (currently 18%) is levied on the amount by which the sale price exceeds the depreciated value.
Examples:
• A registered dealer buys a car for โน20 lakh and sells it for โน22 lakh. GST is charged on the โน2 lakh profit.
• If the car is sold for โน10 lakh after being purchased at โน12 lakh, no GST applies since there’s no profit.
๐๐น๐ฒ๐ฎ๐ฟ๐ถ๐ป๐ด ๐จ๐ฝ ๐ ๐ถ๐๐ฐ๐ผ๐ป๐ฐ๐ฒ๐ฝ๐๐ถ๐ผ๐ป๐
Recent media coverage of the Finance Minister Nirmala Sitharaman’s comments during the GST Council meeting has caused confusion, claiming GST applies even when a vehicle is sold at a loss. This is not true. The law is clear: no profit, no GST. If the sale price doesn’t exceed the depreciated value, no tax liability arises.
Sign Up on mentblue here: 
And check out each of mentblue offerings here:
In My Preferred Transformation and Hospitality Pvt. Ltd. & Anr. v. M/s Faridabad Implements Pvt. Ltd., the Supreme Court delved into the interplay between the Limitation Act, 1963, and the Arbitration and Conciliation Act, 1996 (ACA). The case centered on whether the benefit of Section 4 of the Limitation Actโwhich extends deadlines when courts are closedโapplies to the 30-day condonable period under Section 34(3) of the ACA. The appellants filed an applic...
On January 10, 2025, Congress leader Rahul Gandhi appeared virtually before a Pune court in connection with a defamation case filed by Satyaki Savarkar, the grandnephew of Vinayak Damodar Savarkar. The case pertains to alleged derogatory remarks made by Gandhi about the Hindutva ideologue during a speech in London in 2023.
On January 9, 2025, the Supreme Court of India dismissed review petitions challenging its October 2023 verdict, which declined to grant legal recognition to same-sex marriages. The five-judge bench, comprising Justices B.R. Gavai, Surya Kant, B.V. Nagarathna, P.S. Narasimha, and Dipankar Datta, considered the review pleas in chambers and found no apparent error in the original judgment, concluding that no interference was warranted.