E Circular from I am SME of India
This circular was authored by Mr Sangeet Kr Gupta , our Co Founder… This was dated 23-12-2024, for the GST Council meeting dt 21-12-24
Some Recommendations of the 55th Meeting of the GST Council ( As relevant to our IamSMEof India members)
ECircular -55th GST Council Meeting dt 21-12-2024 (click here)
Click the link above to see / Download the Circular
Published for the internal usage for the members and clients of M/s. Finsys Infotech Limited and M/s. MLG Associates
E-circular dated 22-12-2024
Integrated Association of Micro, Small & Medium Enterprises of India
E-mail: info@iamsmeofindia.com, +91-9711123111 (Executive Secretary)
| Rajive Chawla
Chairman, IamSMEofIndia |
|
Sangeet Kr Gupta
Hon. Consultant, IamSMEofIndia |
Dear Members,
Some Recommendations of the 55th Meeting of the GST Council ( As relevant to our members )
Note : Detailed notifications are yet to be released. The above is based on the Press Release dt 22-12-24. The meanings may change, after the actual Circulars / Notifications are released
Now in Detail… first for Sale of Used Cars
To bring supply of the sponsorship services provided by the body corporates under Forward
Charge Mechanism.
GST Council recommends no GST on transaction of vouchers as they are neither supply of goods nor supply of services.
The provisions related to vouchers is also being simplified. GST Council clarifies that no GST is payable on ‘penal charges’ levied and collected by banks and NBFCs from borrowers for non-compliance with loan terms
GST on Old and Used Vehicles
Old Position
| Smaller Vehicles | 12% on the Gain portion only |
| Larger Vehicles | 18% on the Gain portion only |
Cess taken at Zero
New position
| All Passenger Vehicles , all types | 18% on the Gain portion only |
Benefit : No confusion to MSME himself, and no confusion to the Government
Note
- This GST is on the Gain portion only
- Gain means : Margin of the Supplier, that is, the difference between the Purchase price, less Depreciation and Selling price, ( That is logical )
- And an unregistered person, say a Salaried person = Not applicable at all
- Cess again remains zero
Source for old position : Notification 8/2018 dt 25-1-2018 – Central Tax (Rate )
Meaning : Law is same for all now
| If Sold Below WDV | If sold above WDV | ||
| Size of Vehicles..4000 mm, 3000 mm. | Any Size | No GST applicable | Yes, GST on “profit portion” only |
| Sports SUV or non SUV | Anything | No GST applicable | Yes, GST on “profit portion” only |
| Ground Clearance Rules…170mm | Anything | No GST applicable | Yes, GST on “profit portion” only |
| Engine Capacity… 1200cc…1500cc..1600cc | Anything | No GST applicable | Yes, GST on “profit portion” only |
| All Size of Vehicles All Size of Vehicles All Size of Vehicles | Same Rate, Same Rules | ||
| Category | GST ? | |
| Normal employees, without registration in GST | No GST | |
| Normal Residents, without registration in GST | No GST | |
| Doctors , or any exempt category | No GST | |
| Sale of old Motorcycle by any user ( salaried or business, except Auto dealers themselves ) | No GST | |
| Any Regd person selling a old car at a loss | Usually Motor Vehicles are sold at a Loss only | No GST |
| Any Regd Person, selling an old Car at Profit over WDV | This is very rare… that Income tax depreciation is 15%.. and actual value reduction is less than this | Yes, GST on the Gain portion only |
Calculation examples
| Car | Purchase Cost | Written down value after 15% annual income tax Depreciation | Sold for | Gain or Loss Value | GST | |
| A | 20,00,000 | 14,00,000 | 13,99,000 | (1,000) | Nil | |
| B | 20,00,000 | 14,00,000 | 10,00,000 | (4,00,000) | Nil | |
| C | 20,00,000 | 14,00,000 | 18,00,000 | 4,00,000 | 18% on 4 lakh | But looks very rare |
| D | 20,00,000 | 5,00,000 | 4,99,000 | (1,000) | Nil | |
| E | 20,00,000 | 5,00,000 | 4,00,000 | (1,00,000) | Nil | |
| F | 20,00,000 | 5,00,000 | 7,50,000 | 2,50,000 | 18% on 2.5 lakh | But usually rare, since cars have a limited life of 10/15 years now |
Note : Detailed notifications are yet to be released
No GST on the Penal Charges by Banks, and NBFC’s
GST 55th council meeting , agreed and clarified that no GST is payable on the ‘penal charges’ levied and collected by banks and NBFCs, from borrowers for non-compliance with loan terms.
This is good
This used to be a PAIN
Already some penal charge levied
And on the top of it its GST….. Now no more
The council has agreed.. that the essence of this is of “Interest”, hence probably GST council smiled and let this go.
Note : Detailed notifications are yet to be released
Ease of Doing Service by the Associations : in GST
| Topic | Current Position | New Position |
| Sponsorship considered | Reverse Charge GST only | Forward Charge GST if done by Corporates ( example Section 8 company ) |
| Loss of GST | The Service provider Association cannot take ITC input of GST on its input services…. and leads to loss , Need to absorb that GST as loss / Cost | No such loss in future |
| Doubling of GST | Yes, Double GST, first paid to vendors of the association by the association, then Again, as RCM by the Sponsor to the Govt. | This Double loss is removed |
In Short, the Government is Making Business Better
For queries, suggestions and feedback , you can e-mail us
Sangeet Kumar Gupta, FCA, DISA, ACMA, PGDMM, B.Com(Hons), Honorary Consultant, Integrated Association of Micro Small and Medium Enterprises of India, 93126-08426, Camp Off : TB-06, 3rd Floor, Crown Plaza, Sector-15A, Faridabad, Haryana 121007 skgupta[at]finsys.in. I am SME of India Office … Plot No.135, Sector 59, Industrial Estate Phase-II, Ballabhgarh, Faridabad- 121004, Haryana.
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Notes & disclaimer
The contents of this circular are for Private circulation & intended for the addressee/s only. We do not warrant that this email is free of mistakes, errors or any other defect. Care has been taken to provide authentic information, but it is advisable to confirm/verify with qualified legal practitioners, professionals before implementing any suggestions. The views expressed are not necessarily those of the Association. We encourage readers, our Members to write to us their opinions, suggestions, ideas, comments, thoughts and bring to our knowledge mistakes, omissions etc. which we’d be pleased to correct/implement.
For personalised suggestions, and solutions, contact our I am SME of India Team and Consultants
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