GST imposed on second hand car dealer

1. If your business model is just being a mediator & car does not get registered in your name (being a middle man) than it wont count as part of your turnover.

What will be part of Turnover??

Ans: Only the fees charged by you will count in Turnover. So kindly sum up the fees & if it exceeds Rs 40 lac then only go for registration.

There is a concept of pure agent, it will apply only in case if you put forward invoice to the purchaser of car from you ( invoice specifically shows that X amount you are collecting on behalf of original car owner & you will reimburse it to original car owner. Then also such amt wont get counted in part of your turnover)

2. If your Income is not on basis of commission & you buy the car at x price & sell at y price without both the parties knowing at what price the other purchase or sell you are doing. Then department may include whole of the amount which you are taking in your bank account as part of your Turnover.

Dear on the reply which you posted their was no link in it.

Question which tax rate is applicable to you.  ??

Ans. 1% & 6% is basically a composition scheme for traders & service providers where you pay flat 1 or 6% of your turnover & get no itc. ( least complaince required)

1% is for those whose work is primarily trading & involves no service component. ( Now post your buynig of car if you are also doing repairing & up gradation work & then you are selling, in that case since service component is involved you need to opt for 6% -service composition. If it pure buying & selling without any service component than it will be straight forward 1% composition.

Second option : Opt for regular scheme where you pay the taxes at 18% of your turnover value & can claim the credit for the input.

Hi

As per Rule 32(5) of the CGST Rules, 2017, where a taxable supply is provided by a person dealing in buying and selling of second hand goods i.e., used goods as such or after such minor processing
which does not change the nature of the goods and where no input tax credit has been availed on the purchase of such goods, the value of supply shall be the difference between the selling price and the purchase price and where the value of such supply is negative, it shall be ignored.

Where as, “aggregate turnover” means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess.

So, the margin amount shall be considered as value of supply and thereby a part of aggregate turnover and not the total sale value. My opinion differs from your CA.

1. Turnover shall be margin amount only.

2. No. You need to register if your aggregate turnover exceeds Rs. 40 lacs.

3. For GST purposes, margin amount shall be value of outward supply. You may even show such net transactions on you Profit and Loss Account.

- Both the options are available to you. Avail ITC and pay GST on the sale value of the second hand car. In case of GST on the margin, you can not avail ITC. 

- If you go by margin method, turnover would be your margin but you need to do little amendments in the Invoicing and accounting entries. 

- Also in case of cars purchased from defaulting borrowers, method of valuation is separate.

- Please consult telephonically for detailed discussion.

Hi,

1.Turnover would be margin amount only.

2. No, you do not need to register for GST upto Rs 40 lakh turnover.

3.You need to consider value of supply for GST purpose.

Hello,

1. If you are opting for the margin scheme or working as commission agents for the sale of second-hand cars, then your turnover would be the margin/commission amount only. 

2. No, unless you are working as a commission agent where GST registration is compulsory.

3. Under the margin system, only the margin would be considered under the Profit and Loss account. Otherwise, if proper purchase and sale is being done, the total purchase and sale value would be considered under the Profit and Loss Account.

I hope that this answer satisfies your requirements.

Regards,

CA Hunny Badlani

Dear Sir,

Here are my replies to your queries:

1. Yes, in your case the turnover will be the commission charged by you from both the parties that is the buyer and seller. 

2. No, in case your turnover as mentioned in point no 1 is less that ₹ 20 lacs then in that case you are not required to get gst registration.

3. The amount that you have received at the time of selling of car will be your liability that you have to pay to the seller after deducting your commission. 

Thanks and Regards 

Divya Chugh 

According to a circular of government car dealer needs to pay GST on selling price less purchase price in case they are dealing in second hand cars if the cars is in their name and for checking the limit of GST the definition would be normal sales.

Since you are not selling car in your name and you are acting as an intermediary who just charges his commission then in that case you need to go as a service provider and limit of 20 lakh would be applicable in that case.

I didnt get your third question.

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