Billing correctly on a pre-owned floor
GST on used cars in India: the margin scheme, explained for dealers.
One rule matters more than any other for a used-car dealer's billing: under the margin scheme, a registered dealer pays GST on the margin — the difference between the buying and selling price — not on the full sale value of the car. Get this right and your pricing and paperwork hold up. Get it wrong and you either overcharge customers or expose yourself at assessment. This page explains the principle in plain terms.
The core idea
You are taxed on your margin, not the whole car.
A new car is taxed on its full value once. Taxing a used car on its full value again at every resale would tax the same vehicle over and over. The margin scheme exists to avoid that: the dealer's GST is calculated on the margin they add, and no input tax credit is taken on the purchase of the vehicle itself. If the margin is nil or negative, there is no GST to pay on that sale.
Why the system matters here
Margin billing needs the real cost of every car.
You can only bill on margin if you actually know your margin — the true purchase price plus any costs, against the sale price, per car. That is why margin billing depends on inventory tracking: Kenro keeps the buy price, each refurbishment cost and the sale price on the car's record, so the numbers your accountant needs are in one place.
Not tax advice. Rates, conditions and notifications under GST change and depend on your specific case — confirm the current rate and rules for your sales with a qualified tax professional before you rely on them. See also the used-car paperwork checklist and how a pre-owned dealership works.
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