GST On Sale of Used EV Cars

The recent GST update on second-hand EVs on 55th GST Council meeting created some confusion after Finance Minister Nirmala Sitharaman’s statement, where she inadvertently mentioned that GST applies even when there’s a loss.

Let’s clarify:

👉 GST is NOT charged on a loss. It applies only on the margin—the difference between the dealer's purchase price and selling price.

👉 No GST is applicable if the sale results in a loss (selling price < purchase price).

👉 Individuals like you and me selling our EVs directly? No GST here either! The tax only applies when a registered dealer is involved in the transaction.

Example to Understand:

1️⃣ Dealer buys a second-hand EV for ₹5,00,000.
2️⃣ Dealer sells it for ₹5,50,000.

• Margin = ₹50,000.

• GST = 18% of ₹50,000 = ₹9,000.

3️⃣ Dealer sells it for ₹4,80,000 (at a loss).

• Margin = -₹20,000 (Loss).

• GST = ₹0 (No tax on loss).

Key Takeaways:

• 18% GST applies only to profits (margin), not losses.

• Direct sales between individuals remain GST-free.