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| - A video is making rounds on the social media claiming that Finance Minister Nirmala Sitharaman has announced an increae of Goods and Services Tax (GST) from 12% to 18% on selling old or used cars. Soon after the announcement, the social media is abuzz with claims and counter-claims, following the press meet by the finance minister.
As per Sitharaman:
I bought my diesel car in 2014 :
Rs. 24 lacs
I sold my diesel car in 2024 :
Rs 3 lacs 2024
Therefore, I have to pay 18% GST on 21 lacs ! (Margin as per her)
GST : 21Lx 18% = 3,78,000
I won’t get anything from my car, top of it, I will have to pay Rs… pic.twitter.com/Lr1ajFl6A4
— Bhavika Kapoor (@BhavikaKapoor5) December 23, 2024
The claim reads:
“As per Sitharaman: I bought my diesel car in 2014 : Rs. 24 lacs
I sold my diesel car in 2024 : Rs 3 lacs 2024
Therefore, I have to pay 18% GST on 21 lacs ! (Margin as per her)”
It has been shared here and here with similar claims.
FACT-CHECK
As the debate is going viral on social media, Digiteye India team found explainers on social media different from what the finance minister said in brief. In her briefing, Finance Minister Nirmala Sitharaman explained it referring to tax on the “margin value” of resales, but mistakenly suggested that individuals selling their used cars would be liable for the tax.
“To increase the GST rate from 12% to 18 % on sale of all old and used vehicles, including EVs other than those specified at 18% – Sale of old and used petrol vehicles of engine capacity of 1200 cc or more & of length of 4000 mm or more; diesel vehicles of engine capacity of 1500 cc or more & of length of 4000 mm and SUVs.[Note: GST is applicable only on the Value that represents Margin of the Supplier, that is, the difference between the Purchase price and Selling price (depreciated value if depreciation is claimed) and not on the value of the vehicle. Also, it is not applicable in case of unregistered persons.]”
Essentially, the taxation is based on three specifications:
1. Unregistered person or private individuals who sell their old cars incur 12% GST as before and do not attract the increased 18% GST.
2. Firms which claimed depreciation on old cars attract this GST when they sell them on the ‘Margin of the Supplier’ or the difference between the Purchase price and Selling price (depreciated value if depreciation is claimed) and not on the value of the vehicle.
3. Companies which buy and sell old cars do attract this 18% GST.
See the finance minister’s explanation in this video:
She has categorically mentioned that individuals, who sell & purchase old cars need not pay any GST whatsoever. Car dealerships will have to pay 18% on the difference between CP and SP of the old car. But of course, you didn’t know! #GSTLiesBusted pic.twitter.com/MMEVg4r1dF
— CA Hemant R (@CAHemantR_25) December 21, 2024
Hence, the claim that the increased GST is across all sales of old cars is false.
Claim: An 18% GST imposed on all sales of old cars.
Conclusion: Misleading. Individual to Individual sale of old cars attract no GST but dealers reselling old cars or those who had availed depreciation do attract 18% while selling their old cars on the margin.
Rating: Misleading —
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