Good news: Planning to buy second hand cars, motorcycles or any other item? Now, Modi govt announces no GST on used goods.

“The value will be difference between selling and purchase price and where the value of such supply is negative it shall be ignored, provided there is no change in nature of goods and credit on purchased second hand goods is not availed by dealer. In case the value determined is negative, i.e. goods are sold at loss then tax will not be payable,” according to GST expert Pritam Mahure as per a report in IANS.

Thus, Margin Scheme can be availed of by any registered person dealing in buying and selling of second hand goods (including old and used empty bottles) and who satisfies the conditions as laid down in Rule 32(5) of the Central Goods and Services Tax Rules, 2017.

Rule 32(5) of the CGST Rules

Rule 32(5) of the CGST Rules is a special sub-rule for person buying and selling second hand goods (for instance used cars, television and mobiles).

Further, the government notification exempts Central Tax leviable on intra-state supplies of second hand goods received by a registered person dealing in buying and selling of second hand goods (who pays the central tax on the value of outward supply of such second hand goods) from any supplier, who is not registered.

“This has been done to avoid double taxation on the outward supplies made by such registered person, since such person operating under the Margin Scheme cannot avail input tax credit on the purchase of second hand goods,” the Finance Ministry said here in a statement.