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