No GST on sale of old jewellery, cars by individuals
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The Revenue Department today
clarified that sale of old jewellery as well as old vehicles by individuals
will not attract any GST as the sale is not for furthering any business.
Clarifying on Revenue Secretary
Hasmukh Adhia's comments yesterday, the department issued a press statement
saying it was informed at GST Master Class yesterday that "purchase of old
gold jewellery by a jeweller from a consumer will be subject to GST at the rate
of 3 per cent under reverse charge mechanism in terms of the provisions
contained in Section 9(4) of the Central GST Act, 2017."
It then went on to state that
the said section has to be read in conjunction with another section and
"even though the sale of old gold by an individual is for a consideration,
it cannot be said to be in the course or furtherance of his business (as
selling old gold jewellery is not the business of the said individual), and
hence does not qualify to be a supply per se."
"Accordingly, the sale of
old jewellery by an individual to a jeweller will not attract the provisions of
Section 9(4) and jeweller will not be liable to pay tax under reverse charge
mechanism (RCM) on such purchases," it said.
Revenue department officials
said the same principal will apply on sale of old cars or two-wheelers and no
GST will be payable even though the supply would be for a consideration.
The statement said that Section
9(4) of the said Act mandates that tax on supply of taxable goods (gold in this
case) by an unregistered supplier (an individual in this case) to a registered
person (the jeweller in this case) will be paid by the registered person (the
jeweller in this case) under reverse charge mechanism.
But since the sale is not in
consideration for the furtherance of business no tax will apply.
It however said the tax would
apply if an unregistered business sells gold ornaments to registered supplier.
"However, if an
unregistered supplier of gold ornaments sells it to registered supplier, the
tax under RCM will apply," it added.
A supplier is defined as the one who buys or sells in furtherance of his
business.
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