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.
You sell a vehicle to your customer for $50,000 (inclusive of ARF, COE, RF, Road Tax but excluding GST).
ARF | $14,000 |
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COE | $13,000 |
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RF | $ 140 |
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Road Tax | $ 500 |
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GST | = (Vehicle Price - ARF - COE - RF - Road Tax) x 7% |
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= ($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
You sell a vehicle to your customer for $51,565 (inclusive of ARF, COE, RF, Road Tax and GST).
ARF | $14,000 |
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COE | $13,000 |
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RF | $ 140 |
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Road Tax | $ 500 |
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GST | = (Vehicle Price - ARF - COE - RF - Road Tax) x 7/107 |
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= ($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 (i.e. $23,925- $1,565.19, cents to be dropped off for reporting purpose)
Output tax due: $1,565.19
For more information, please refer to GST: Guide for Motor Vehicle Traders (971KB).
To compute the GST chargeable, use GST Computation Template for Sale of New Vehicles (41KB).
Sale of Second-hand vehicle
When 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.
Gross Margin Scheme
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).
Discounted Sale Price 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 a situation, you cannot use the Gross Margin Scheme.
- Your customer is GST-registered. In such a 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 (971KB).
To compute the GST chargeable, use GST Computation Template for Sale of Used Vehicles (28KB).
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
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.
Based on 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 (i.e. $1,500 - $32.71, cents to be dropped off for reporting purpose)
Output tax due: $32.71
Selling Price is Lower or Equal to the Purchase Price
When 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.
Eligibility for the Gross Margin Scheme
To review your eligibility, use the Self-Review of Eligibility and Declaration on Use of Gross Margin Scheme (GMS) (193KB).
After verifying that all conditions and obligations 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.
You sold a motor vehicle at $25,000 (excluding GST)
GST chargeable = $25,000 x 50% x 7% = $875
For GST reporting purposes
Value of standard-rated supply: $25,000
Output tax due: $875
You sold a motor vehicle at $25,875 (inclusive of GST)
GST chargeable = $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