Big relief on buying and selling second hand gold jewellery, now GST will be applicable only on profits
Gold Jewellery Resale: People who buy second hand jewellery from jewelers will now have to pay a lower price. Because after a decision, the tax on resale of second hand jewelry will be less.
New Delhi: Gold Jewellery Resale: A major decision of the Authority for Advance Ruling (AAR) has come regarding the GST on the purchase and sale of gold jewellery. With this decision, the GST on the resale of second hand jewellery will be significantly reduced. This will benefit those consumers who will buy second hand jewellery. They have to pay less tax.
GST on selling second hand gold jewellery
According to this decision of Karnataka AAR, only the profit earned by the jewelers on the resale of second hand gold jewellery will attract GST. Aadhya Gold Private Ltd, a Bangalore based company had given an application in AAR. In which clarification was sought on whether GST would be applicable only on the difference in prices between the purchase and sale of second hand gold jewellery, if its form or nature has not been changed while selling the jewellery.
Here is the decision of AAR
The Karnataka Bench of AAR says that since the jeweler is not melting the jewellery into bullion and then making new jewellery from it, but is cleaning and polishing it and selling it without changing its form, hence the purchase of jewellery and Whatever is the margin between sales, only that will attract GST.
What do experts say?
Experts say that due to this decision, the GST on the resale of second hand jewellery will be reduced significantly. At present, the industry charges 3% on the total value of gold ornaments from buyers. But this will not happen after this rule. GST will be applicable only on profit instead of total cost. This means that suppose the value of any gold jewellery is Rs 1 lakh, then 3% GST on it is Rs 3000, now if the same is to be levied on the profit. Suppose this jewellery was bought for Rs 80 thousand and sold for Rs 1 lakh, then the profit came to Rs 20,000. So 3% GST on 20000 is Rs.600.
Tax will be reduced on second hand jewellery buyers
Rajat Mohan, Senior Partner, AMRG & Associates says that most of the jewellers buy old jewellery from common man/unregistered dealers to avoid the need of tax credit in the hands of jewellers. Mohan said Karnataka AAR’s decision to levy GST only on the difference between the purchase price and the selling price will reduce the tax burden for consumers, which will impact the industry.
