If a private limited company own a car and it sold after 4 years tax treatment?

A company (Pvt ltd) have purchase and sold the car after 4 years, does this comes under capital gain and what is the treatment?

In an another perception is what is the treatment in GST once I sold the car and in an accounting concern book that as a profit on sale of asset so I will show as sale of car?

Hello @karthi_kn,

Yes, sale of car by company after being used for business comes under capital gains tax. You need to check the block of asset of which the car is a part. If the block has no other asset left then gains will be calculated as difference of sales price and written down value. If the block has some other assets and after reducing the sale price of car the block value becomes nil then capital gains arise, but if the block has value left then no capital gains will arise.

From GST perspective, tax @18% will be levied on the value of sales consideration as reduced by depreciation as per Income Tax Act.

If there is profit on sale, that needs to be booked in the accounts and removing the car sold from the block of asset.

For further queries, you can book a Meet where a tax expert will help you understand better.

Hope this helps!

Continuing the discussion from If a private limited company own a car and it sold after 4 years tax treatment?:

Thank for the advise Niyati ,So, Do we need to pay tax both GST and capital gain?

Hello @karthi_kn,

Yes, you will have to pay both the taxes, GST and Capital Gains tax.

Thank you so much, Niyati. It was very helpful.

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