Gujarat AAR: Sale of Used Car Attracts 18% GST

The Gujarat Authority of Advance Ruling (AAR) has ruled that 18% Goods and Services Tax (GST) is payable on the sale of a car after using it for business purposes.

M/s. Dishman Carbogen Amcis Limited (applicant) purchased a new car for Rs. 80 lakh on 16th February 2018 for business purposes. The applicant did not avail of the Input Tax Credit (ITC) when purchased due to it being restricted under Sec 17(5) of the Central GST Act, 2017. However, they claimed depreciation under the Income Tax Act, 1961.

The applicant stated that they want to sell the used car for Rs. 55 lakhs and charge GST according to notification 8/2018 CT(R) dated 25th January 2018.

So, the applicant sought an advance ruling regarding the GST rate applicable on the new car purchased by the company that is sold after using it for business purposes. The AAR found that the used car falls under serial number 3 to notification 8/2018-CT(R) dated 25the January 2018.

The serial number 3 to notification 8/2018-CT(R), dated 25th January 2018, states that 18% GST is payable on old and used motor vehicles with an engine capacity exceeding 1500 cc. Those vehicles are popularly known as Sports Utility Vehicles (SUVs), including utility vehicles.

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