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.

Accounting for and Reporting GST

You must charge GST on 50% of the sale price and report the value of standard-rated supply and output tax in your GST return.

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 (including 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

Non Second-Hand Motor Vehicle Dealers

You should use the Discounted Sale Price Scheme when you occasionally sell a vehicle that you have used in your business.

Second-Hand Motor Vehicle Dealers

You may use the Discounted Sale Price Scheme in the following situations:

  1. You previously claimed GST on the purchase of the vehicle and, therefore, cannot use the Gross Margin Scheme; or
  2. 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 ).

Gross Margin Scheme

Another method to charge GST on second-hand motor vehicles is the Gross Margin Scheme.

Gross Margin Scheme applies to second-hand motor vehicles that were purchased free of GST (e.g. purchased from non-GST registered person or GST-registered supplier who had used the Gross Margin Scheme).

For more information, please refer to Gross Margin Scheme .

  • I am not a motor car dealer and I did not claim GST on my company vehicle as the input tax is disallowed. Do I need to charge GST on the sale of my company vehicle?

    Yes, you are required to charge GST on the sale of your company vehicle even though you did not claim GST on the purchase of the vehicle.

    You should use the Discounted Sale Price Scheme and GST is charged on 50% of the selling price of the used vehicle.

  • I am selling a second-hand vehicle using Discounted Sale Price Scheme. Should I reflect the full selling price or 50% of the selling price on the tax invoice?

    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%).

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