The Central Government implemented the Goods and Service Tax (GST) from July 1, 2017, in India. With automobiles attracting the highest GST of 28 percent plus cess based on body type and engine capacity.
However, there was no clarity about GST on used vehicles, the Revenue Departement has clarified that individuals looking to sell their old vehicles will not have to pay GST on the sale as it is not for furthering any business.
The department stated that the said section has to be read in conjunction with another section. And even though the sale of old vehicles by an individual is a consideration, it cannot be said to be as selling old cars is not the business of the said person, and hence does not qualify to be a supply per se.
However, it said that the GST would be applicable if an unregistered business sells four-wheelers or two-wheelers to the registered supplier (who buys or sells in furtherance of his business).
Now that there is clarity of GST on used cars or old cars, wherein, GST is not applicable if there is no business interest in the sale of his old car or bikes, potential buyers need to make note that any sales of registered used car or bike sales outlet will attract GST.