GST Margin Scheme Calculator
Second-hand car dealer? Charge GST only on your margin — not the full sale value. See your margin, GST payable and net margin live.
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- Rules cited on the page
Enter your figures — the result on the right updates as you type.
Margin scheme breakdown
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Disclaimer: Indicative estimate for second-hand goods dealers under Rule 32(5). The margin scheme applies only where no ITC was availed on purchase. Confirm the applicable rate (12% / 18%) for your vehicle category. Rates per Notification 8/2018-CT(R).
The margin scheme — Rule 32(5) in one screen
A dealer in second-hand goods (including used cars) does not pay GST on the full sale price. Under Rule 32(5) of the CGST Rules, GST is charged only on the margin — the difference between selling price and purchase price. If the margin is nil or negative (you sell at a loss), no GST is payable. This is allowed only if no input tax credit was claimed when the vehicle was bought.
GST rate on the margin — used motor vehicles
Notification 8/2018-Central Tax (Rate) reduced the GST rate on the sale of used motor vehicles. The rate applies to the margin, not the sale value. Larger cars and SUVs are at 18%; smaller cars and electric vehicles are at 12%.
| Petrol / LPG / CNG car, engine ≥ 1200cc & length ≥ 4000mm | 18% |
| Diesel car, engine ≥ 1500cc & length ≥ 4000mm | 18% |
| SUV, engine > 1500cc | 18% |
| Small petrol car (< 1200cc or < 4000mm) | 12% |
| Small diesel car (< 1500cc or < 4000mm) | 12% |
| Electric vehicles & other used vehicles | 12% |
Worked examples
The GST is simply margin × rate. When the car is sold at a loss, the margin is nil and no GST is due.
Key terms explained
Margin
The selling price minus the purchase price of the used car. Where the dealer has spent on repairs or reconditioning, that cost is added to the purchase cost and reduces the taxable margin. GST applies only to a positive margin.
Rule 32(5)
The valuation rule for dealers in second-hand goods. It lets you value the supply as the margin, provided no input tax credit was availed on the purchase of the goods. This avoids GST on the full sale value.
No ITC condition
The margin scheme is available only if you did not claim ITC on the vehicle when you bought it. In turn, your buyer cannot claim ITC on a margin-scheme purchase — the invoice should note that the margin scheme applies.
Notification 8/2018
Fixed the concessional GST rate on used motor vehicles at 18% or 12% on the margin (by engine size / length / fuel type), and removed compensation cess on such margin-scheme sales.
Questions people ask
Short answers on GST Margin Scheme (Used Cars). Tap a question to open it.
01What is the GST margin scheme?
Rule 32(5) lets a dealer in second-hand goods pay GST only on the margin — selling price minus purchase price — instead of on the full sale value, provided no input tax credit was claimed on the purchase and the goods are sold as such or after minor processing that does not change their nature.
02What if the margin is negative?
A negative margin is ignored — the value is treated as nil and no GST is payable on that transaction. The loss cannot be set off against the margin on another sale.
03Can I claim input tax credit under the margin scheme?
No. Availing credit on the purchase disqualifies the transaction from the scheme entirely, and GST would then be payable on the full sale value.
04Does the scheme apply to purchases from unregistered persons?
Yes — that is its main use. Buying a used vehicle from an individual attracts no GST on the purchase, and the dealer pays GST only on the resale margin. Notification 10/2017 also exempts such inward supplies from reverse charge.
05Does the margin scheme apply only to vehicles?
No. It applies to any second-hand goods — machinery, phones, furniture — sold by a dealer in used goods, subject to the same conditions.
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Disclaimer: This tool gives indicative results for general guidance only and is not professional advice. Please verify with a qualified CA before acting on the numbers.