Question12:

GST IMPLICATION ON USED CARS DEALERS
1) CAN A USED CAR DEALER OPT FOR COMPOSITION SCHEME AND IF SO WILL HIS TURNOVER BE ONLY HIS PROFIT MARGIN??
2) IF HE OPTS FOR MARGIN SCHEME, THEN WOULD HE BE ABLE TO GET THE BENEFIT OF BASIC EXEMPTION LIMIT OF 20 LAKHS.
3) THE DEALER DOES NOT TRANSFER THE CAR IN HIS OWN NAME, EVEN THEN WOULD THIS BE HIS TURNOVER. FURTHER EVEN IF THE BUYER IS UNIDENTIFIED AT THE TIME OF PURCHASE OF VEHICLE WOULD HE STILL BE ACTING AS AN AGENT.

Answer

Section 2(6) defines "aggregate turnover'  which 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.
For tax payment under margin scheme value of taxable supply = sale price- purchase price . But aggregate turnover includes total turnover of old car i.e sale price for which consideration is received by car dealer.

On the basis of above understanding  point wise reply as follows:-

1. Yes, A used Car dealer can opt for composition scheme where the aggregate turnover is less than 1 crore. But according to rule 7, he is required to pay tax tax @ 1/2 % CGST +1/2 % SGST on of the turnover of taxable supplies of goods in the State or Union territory. 

Thus 1 % of  turnover calculated not only on margin amount but on total taxable turnover in a tax period. 

2. Yes,  a car dealer eligible for exemption limit of 20 lakh for registration but aggregate turnover is total turnover of old car for which consideration is received not only margin money.

3. If the dealer has made full payment to the vendor and taking full payment from the customer then the total amount will be considered as turnover irrespective of the fact whether the  car is transferred in favour of the dealer or not. But if the customer is directly paying to the vendor and the dealer is getting only commission from the customer or vendor then the commission amount will be value for the dealer and it is the transaction of car and the payment made against it that will decide about the value of supply. (Reply dt. 12/3/2018)