Question7:

We request you to clarify the following:

1. GST Rate Applicable on Leasing of Motor Cars by availing Input Credit
2. Whether GST is Applicable on Used Cars where Input GST is not availed

Answer:  1 -

 The applicability of GST on leasing of Motor Vehicles is governed by Section 7(1)(a) of CGST Act, 2017 read with Notification Notification No. 37/2017-CT (R) dated 13.10.2017. Motor vehicles covered under Chapter 87 can be given on lease and on such leasing applicable rate of tax would be 65% of the applicable rate of central tax prescribed under Notification No. 1/2017-CT (R) dated 28.06.2017 i.e. 65% of 28%. There are two conditions applicable as per the said Notification No. 37/2017, which are as under;
(i)  The Motor Vehicle was purchased by the lesser prior to 1st July, 2017 and supplied on lease before 1st July, 2017, and
(ii)  (a) The supplier of Motor Vehicle is a registered person, and 
      (b) Such supplier had purchased the Motor Vehicle prior to 1st July, 2017 and has not availed input tax credit of central excise duty, Value Added Tax or any other taxes paid on such vehicles.
 

 2 - According to Section 7(1)(a) of CGST Act, 2017, all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business amounts to supply and is taxable under GST regime irrespective of the fact whether ITC has been availed under earlier/existing regime or not.  The passenger vehicle, purchased under earlier regime is taxable under GST regime as the same is being sold for a consideration in furtherance of business. 
1.      Whether GST is Applicable on Used Cars where Input GST is not availed

(Reply dt. 22/11/2017)