Question

GST is payable on Demo Cars.Demo cars are sold at dicounted price as they are used for Demo purposes for about six months. The issue here is whether it can be equated to a used vehicle and the benefit of CGST Notification (Rate) No. 08/2018 can be extended to it. I am of the opinion that the notification is applicable only to old and used vehicle.

Answer

The Notification 8/2018 Central Tax (Rate) dated 25/01/2018 is applicable when you are selling used car and the valuation is compared with the Book value. The demo car is sold from the trading stock and not taken in as fixed asset of the company. If you are taking demo car in fixed asset of the company then you will charge depreciation on it and this depreciated value will be compare with transaction value to charge tax but the problem is that ITC on purchase will not be allowed because you are not using it for taxable supply like renting a cab. You are using it for free demo so if you will do all the calculation, you will conclude that choosing for Notification No-8/2018 Central Tax (Rate) will not be a good decision.
Considering the sacrifice of ITC with the lower rate of tax.  (Reply dt.05/02/2019)