Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 18-8-2017 – Goods and Services Tax (GST) in now a reality and then most of the present indirect taxes on goods and services shall become history making GST indeed historic. The launch ceremony at Parliament House has rewritten a new destiny, this time an economic one. GST, though has been claimed as one of the biggest tax reforms ever, it is also being seen as one of the most challenging times for automobile sector. Here is an attempt to flag certain areas of concerns for automobile industry and automobile dealers which are indeed grey, both in colour as well as in understanding and interpretation. Closing Stock of Vehicles / Spare Parts GST law provides that all closing sto
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d for marketing and training as a usual business practice which are presently not considered as capital goods. There are two divergent views on the same in view of specific denial of credit to motor vehicles in input tax credit provisions. Discounts on Vehicles Giving discounts to buyers of vehicles by dealers in different forms is very common. It could be via invoice or otherwise. Dealers also get discounts from the manufacturers of vehicles in the nature of quantity or trade discount / incentive. Their tax treatment and documentation would be crucial to avoid interpretational disputes with the Department. Marketing Strategies and Freebies At present auto dealers offer incentives to potential buyers in the form of free insurance, free acce
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ly subject to repair and maintenance which will involve supply of consumables as well as spare parts. Rates of both goods as well as services would be different, i.e., 28 or 18%. The problem of treating a transaction as a mixed or composite supply is a technical issue wherein interpretation may be divergent and would lead to disputes. Heavy Taxes on pre-owned Vehicles Dealing in second hand goods (pre-owned vehicles) is a substantial part of dealer's business. There is no concessional rate of tax prescribed looking to the fact that such goods would have suffered tax already at the time of first purchase. Advance Booking of Vehicles Vehicles booking by paying advance money has have been taxed in past but in GST regime, advance bookings w
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