Question 1

How is GST calculated on a used vehicle sale?

Accepted Answer

Under the dealer margin scheme (Rule 32(5) of the CGST Rules), GST applies only to your margin - the selling price minus the purchase price - not the full selling price. Since the 55th GST Council meeting (effective 16 January 2025), a flat 18% rate applies to that margin. If your margin is zero or negative, GST is nil.

Question 2

Does this apply to every dealer?

Accepted Answer

This calculator assumes you are a registered dealer using the margin scheme - i.e. you have not claimed input tax credit (ITC) on the vehicle’s purchase, which is the standard treatment for most used-vehicle dealers. If you have claimed depreciation on the vehicle under Section 32 of the Income-Tax Act, your margin is instead based on the depreciated value rather than the purchase price - that case isn’t covered here.

Question 3

Is this tax advice?

Accepted Answer

No. This tool is a guide to help you estimate profit and GST quickly. For your specific situation, always confirm the figures with a chartered accountant before filing.

Question 4

Do I need to include RTO or registration transfer charges?

Accepted Answer

Only if you personally pay them. Many dealers arrange a direct ownership transfer straight from the original owner to the final buyer - the dealer never becomes the registered owner, so the buyer bears the RTO/registration fee, not the dealer. If you do register the vehicle in your own name as part of the resale, add that cost under "Other expenses."

Question 5

What if I don't know the exact commission?

Accepted Answer

Use your best estimate - the calculator updates instantly, so you can adjust it once you have the real figure. If commission is usually a percentage of the sale rather than a fixed amount at your dealership, switch the toggle next to the Commission field to "% of sale."

Question 6

Can I use this for a new (unregistered) vehicle?

Accepted Answer

No - this calculator is built for used-vehicle resale under the GST margin scheme, which only applies to second-hand goods. New vehicle sales are taxed differently (GST on the full invoice value, with input tax credit available), so the numbers here would not be correct for a new car.

Question 7

Does loan or financing interest count as a cost?

Accepted Answer

Not in this calculator - interest on a loan you used to finance the purchase is a financing cost, not part of the vehicle's own margin or GST calculation, so including it here would understate your margin for GST purposes. Track financing costs separately when working out your overall business profitability.

Used Car Profit & GST Margin Scheme Calculator (India)

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Results

Track every payment & GST

How this is calculated

Related reading

How to Calculate Profit Per Car at a Used Car Dealership (Formula + Free Calculator)

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