In an important clarification that is bound to bring cheer to people who follow the gold old Indian habit of selling old gold jewellery for cash, the government on Thursday said that GST won't apply when individuals sell old gold ornaments or cars.
Ever since the July 1 Goods and Services Tax roll out, there has been a worry among individuals and jewelers that transactions on old gold jewellery and cars would attract 3 per cent GST under the Reverse Charge Mechanism. The mechanism is meant for unregistered suppliers (in this case the customer) selling products to registered businesses (in this case, goldsmiths).
Under RCM, registered business would be liable to pay 3 per cent GST while purchasing products from unregistered suppliers, which some assumed included individuals who do not normally deal in those products.
The assumption was that if, for example, an individual sells old jewellery worth Rs 1 lakh to a jeweler, the latter would have to pay a GST of Rs 3,000, which he/she would deduct from the money paid for the jewellery.
Revenue Secretary Hasmukh Adhia on Wednesday made comments that furthered this idea. However, Finance Minister Arun Jaitley on Thursday clarified the situation that GST would not apply in cases when individuals sell their old jewellery to goldsmiths.
The clarification means that jewelers will not be liable to pay GST under RCM when they purchase old gold from individuals.
Similarly, the government has clarified that GST will not be levied in cases of individuals selling their old cars.
However, if the person selling the old gold is an unregistered supplier of gold ornaments, then the GST of 3 per cent will apply, Jaitley further clarified.
However, in instances when a jeweler is given old ornaments in order to make modifications, a 5 per cent GST would be levied as this will be considered to be job works.
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