You must charge GST on the selling price of the motor vehicle less regulatory fees (e.g. COE). For sale of second-hand vehicles, you may use the Gross Margin Scheme (subject to the fulfillment of certain conditions) or the Discounted Sale Price Scheme
to account for the GST.
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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 if these regulatory charges are included in your selling price of the new vehicle.
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 1: Sale price excluding GST
You sell a vehicle to your GST registered customer for $155,000 (inclusive of ARF, COE, RF, Road Tax but excluding GST).
| ARF | COE | RF | Road Tax |
|---|---|---|---|
| $20,000 | $95,000 | $ 350 | $ 400 |
| GST |
|---|
| = (Selling Price - ARF - COE - RF - Road Tax) x 9% |
| = ($155,000 - $20,000 - $95,000 - $350 - $400) x 9% |
| = $39,250 x 9% |
| = $3,532.50 |
For GST reporting purposes
Value of standard-rated supply: $39,250
Output tax due: $3,532.50
Example 2: Sale price including GST
You sell a vehicle to your non-GST registered customer for $158,533 (inclusive of ARF, COE, RF, Road Tax and GST).
| ARF | COE | RF | Road Tax |
|---|---|---|---|
| $20,000 | $95,000 | $ 350 | $ 400 |
| GST |
|---|
| = (Selling Price - ARF - COE - RF - Road Tax) x 9/109 |
| = ($158,533 - $20,000 - $95,000 - $350 - $400) x 9/109 |
| = $42,783 x 9/109 |
| = $3,532.54 |
For GST reporting purposes
Value of standard-rated supply: $39,250.46 (i.e. $42,783 - $3,532.54)
Output tax due: $3,532.54
For more information, please refer to GST: Guide for Motor Vehicle Traders (PDF, 622KB).
To compute the GST chargeable, use GST Computation Template for Sale of New Vehicles (XLSX, 17KB).
Sale of second-hand vehicle
As a motor trader, when you sell 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 (GMS)
Under the Gross Margin Scheme, GST is accounted for on the gross margin instead of the full value of the goods supplied. You are required to self-review your eligibility, agree to complying with the conditions and submit a form to IRAS before applying the Gross Margin Scheme to your sales.
For more information, please visit our webpage on Gross Margin Scheme and the GST: Guide for Motor Vehicle Traders (PDF, 622KB).
If you have previously received IRAS’ approval to use the scheme, you can continue to use the scheme so long as you still satisfy the conditions in the Form. You need not submit the Form again. You would have to re-apply for the use of the scheme if there is a change of taxable person (e.g. when there is a change in business constitution), since the scheme is not transferable from one taxable person to another.
Discounted Sale Price Scheme
Under the Discounted Sale Price Scheme, GST is accounted for 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 should use the Discounted Sale Price Scheme when you do not satisfy the requirements for the use of the Gross Margin Scheme on the sale of your second-hand vehicle or your customer is GST-registered.
For more information, please visit our webpage on Discounted Sale Price Scheme and the GST: Guide for Motor Vehicle Traders (PDF, 622KB).
To compute the GST chargeable, use GST Computation Template for Sale of Used Vehicles (XLSX, 16KB).
Sale of vehicle body
Please refer to GST: Guide for Motor Vehicle Traders (PDF, 622KB) for more details.
To compute the GST chargeable, use GST Computation Template for Sale of Vehicle Bodies (XLSX, 15KB).
FAQs
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%).
I bought a motor vehicle from a GST-registered supplier who had used the Gross Margin Scheme. Can I claim input tax on the purchase?
No, you cannot claim any input tax on the purchase.
If I sell second-hand vehicles using the Gross Margin Scheme, can I issue a tax invoice to my customers?
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; and
- 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.
I make 2 sales transactions using the Gross Margin Scheme. For the first transaction, there is a loss (i.e. selling price is lower than purchase price). Can I use the loss to offset the gross margin on the second transaction for the purpose of determining the total GST to be accounted for?
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.
How do I charge and account for GST when I sell/scrap dismantled vehicle parts? Can I use the Gross Margin Scheme?
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.
As part of my sales promotion, I offer free accessories (e.g. tyres, seat covers) to my customer. Do I have to account for GST on these free gifts?
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.