Thu Dec 26 08:50:00 UTC 2024: ## Confusion Clears: New GST on Used Cars Affects Businesses, Not Individuals
**New Delhi:** A recent increase in GST on used cars from 12% to 18% has sparked widespread confusion, fueled by misinformation circulating on social media. While the change is real, and approved at the recent GST Council meeting, the impact on average citizens is minimal.
The misleading claims suggest that individuals selling used cars at a loss will still be liable for the 18% GST. This is incorrect. The new rate applies only to GST-registered businesses dealing in used vehicles, not individual sellers. Private citizens selling their used cars, whether at a profit or a loss, are not subject to this GST.
The 18% GST applies only to the profit margin of registered used car dealers. For example, a dealership purchasing a car for ₹5 lakh and reselling it after repairs for ₹6 lakh (having spent ₹50,000 on repairs), would only pay GST on the ₹50,000 profit.
Similarly, businesses that purchase multiple cars for bulk discounts and later resell them will only pay GST on any profit made above their depreciated value. A company claiming a depreciated value of ₹80 lakh for cars initially costing ₹1 crore and reselling them for ₹85 lakh would pay GST on the ₹5 lakh profit.
The key takeaway: The increased GST on used cars affects only businesses registered under GST, and only on profits from their used car sales. Private individuals selling used cars will not be impacted, regardless of whether they make a profit or loss.
First Piper 