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.
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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.
Example 1: Sale price excluding GST
You sold a motor vehicle at $25,000 (excluding GST) on 5 Jan 2024.
GST chargeable = $25,000 x 50% x 9% = $1,125
For GST reporting purposes
Value of standard-rated supply: $25,000
Output tax due: $1,125
Example 2: Sale price including GST
You sold a motor vehicle at $52,250 (including GST) on 5 Jan 2024.
GST chargeable = $52,250 x 9/209 = $2,250
For GST reporting purposes
Value of standard-rated supply: $50,000 (i.e. $52,250 - $2,250)
Output tax due: $2,250
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 should use the Discounted Sale Price Scheme in the following situations:
- You do not satisfy the requirements for the use of the Gross Margin Scheme on the sale of your second-hand vehicle (e.g. your second-hand vehicle was purchased from a GST-registered supplier who did not use the Gross Margin Scheme on the sale made to you); 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 ).
Another method to charge GST on second-hand motor vehicles is the Gross Margin Scheme. For more information, please visit our webpage on Gross Margin Scheme.
FAQs
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. 9% GST @ Selling Price x 50%).