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Sale of new vehicle
Sale of second-hand vehicle
Sale of vehicle body
Sale of new vehicle
You should charge GST on the selling price less Additional Registration Fee (ARF), Certificate of Entitlement (COE), Registration Fee (RF) and road tax. ARF, COE, RF and road tax do not attract GST as they are regulatory charges imposed by Land Transport Authority (LTA) on vehicle buyers.
Example:
You sell a vehicle to your customer for $50,000 (inclusive of ARF, COE, RF, Road Tax but excluding GST).
| ARF |
$14,000 |
| COE |
$13,000 |
| RF |
$ 140 |
| Road Tax |
$ 500 |
| GST |
= (Vehicle Price - ARF - COE - RF - Road Tax) X 7% |
| = ($50,000 - $14,000 - $13,000 - $140 - $500) X 7% |
| = $22,360 X 7% |
| = $1,565.20 |
For GST reporting purposes
Value of standard-rated supply: $22,360
Output tax due: $ 1,565.20
Example:
You sell a vehicle to your customer for $51,565 (inclusive of ARF, COE, RF, Road Tax and GST).
| ARF |
$14,000 |
| COE |
$13,000 |
| RF |
$ 140 |
| Road Tax |
$ 500 |
| GST |
= (Vehicle Price - ARF - COE - RF - Road Tax) X 7/107 |
| = ($51,565 - $14,000 - $13,000 - $140 - $500) X 7/107 |
| = $23,925 X 7/107 |
| = $1,565.19 |
For GST reporting purposes
Value of standard-rated supply: $22,359.81 (i.e. $23,925- $1,565.19)
Output tax due: $ 1,565.19
For more information, please refer to GST Guide for Motor Vehicle Traders (328KB). You can download GST Computation Template for Sale of New Vehicles (30KB) to assist you to compute the GST chargeable.
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Sale of second-hand vehicle
If you are selling a second-hand motor vehicle, there are two methods to charge GST. They are the Gross Margin Scheme and Discounted Sale Price Scheme.
Which method should I use?
You may use the Gross Margin Scheme if:
- You are in the business of selling used vehicles; and
- The used vehicles were purchased free of GST (e.g. vehicles purchased from non-GST registered person or GST-registered supplier who had used the Gross Margin Scheme).
You may use the Discounted Sale Price Scheme in the following situations:
- You have previously claimed GST on the purchase of the vehicle. In such situation, you cannot use the Gross Margin Scheme.
- Your customer is GST-registered. In such situation, selling under the Discounted Sale Price Scheme will enable your customer to claim the GST incurred if it is a commercial vehicle (subject to conditions for claiming input tax).
For more information, please refer to GST Guide for Motor Vehicle Traders (328KB). You can download GST Computation Template for Sale of Used Vehicles (28KB) to compute the GST chargeable on sale of used vehicle using Gross Margin Scheme/Discount Sale Price Scheme.
Gross Margin Scheme (GMS)
Under the Gross Margin Scheme, GST is accounted for on the gross margin instead of full value of the goods supplied.
Gross Margin = Selling Price (inclusive of GST) – Purchase Price
GST = Gross Margin x 7/107
Example:
You are in the business of selling second-hand cars. You bought a car from a non-GST registered person at $1,000 and sold the car to your customer for $1,500. If you use the Gross Margin Scheme:
GST = ($1,500 - $1,000) x 7/107 = $32.71
For GST reporting purposes
Value of standard-rated supply: $1,467.29 (i.e. $1,500 - $32.71)
Output tax due: $ 32.71
If the selling price is lower than or equal to the purchase price, the gross margin is treated as nil and no GST has to be accounted for. However, the selling price is to be reported in Box 1 (Total value of standard-rated supplies) of the GST return.
If you wish to use the Gross Margin Scheme, please review your eligibility by downloading the Self-Review of Eligibility and Declaration on Use of Gross Margin Scheme (GMS) (187KB).
After verifying that all conditions and obligations as stated in the form can be satisfied, please submit the original form to IRAS. You can begin to use the Gross Margin Scheme from the date of declaration. No further approval is required from IRAS.
Discounted Sale Price Scheme
Under the Discounted Sale Price Scheme, you can charge GST on 50% of the selling price when you sell a second-hand/ used vehicle. You do not need to seek prior approval from IRAS to use the scheme.
Example:
You sold a motor vehicle at $25,000 (excluding GST). GST is chargeable at 50% of the selling price.
GST = $25,000 x 50% x 7% = $875
For GST reporting purposes
Value of standard-rated supply: $25,000
Output tax due: $ 875
Example:
You sold a motor vehicle at $25,875 (inclusive of GST). GST is chargeable at 50% of the selling price that excludes GST.
GST = $25,875 x 7/207 = $875
For GST reporting purposes
Value of standard-rated supply: $25,000 (i.e. $25,875 - $875)
Output tax due: $ 875
Sale of vehicle body
Please refer to GST Guide for Motor Vehicle Traders (328KB) for more details. You can download GST Computation Template for Sale of Vehicle Bodies (25KB) to compute the GST chargeable.
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FAQs
You should reflect the full selling price on your tax invoice and state how the GST is computed (e.g. 7% GST @ Selling Price X 50%).
No, you cannot claim any input tax on the purchase.
No. You cannot issue a tax invoice for sales made under the Gross Margin Scheme. You can only issue a normal sales invoice which must have the following details:
- your name, address and GST registration number
- your customer’s name and address
- invoice number
- invoice date
- stock book number
- particulars of vehicle (registration, engine and chassis numbers, make and model)
- total price
- your signature
- the statement ‘This vehicle is sold under GST Gross Margin Scheme. Both the seller and buyer cannot claim any input tax on the vehicle.’
Please note that the GST chargeable is not to be shown on the invoice.
No. For the first sales transaction, no GST has to be accounted for. For the second sales transaction, you have to account for GST on the gross margin of the goods. You cannot offset the loss in the first sales transaction against the gross margin on second sales transaction for the purpose of determining the total GST to be accounted for.
When you dismantle a vehicle into various parts and sell/scrap the dismantled vehicle parts, you need to charge and account for GST on the full selling price of the vehicle parts.
You cannot use the Gross Margin Scheme for sale of vehicle parts.
No. As the cost of the ‘free gifts’ would have already been included in the selling price of the vehicle sold, you need not account for GST again on the free gifts.