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Marginal Scheme Of GST Applies On Purchase Of Old Gold Jewellery: Know All

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Often we engage in the resell of refurbished goods and on the same GST applies again that results in double taxation. This incident of double taxation is prevented through the provision of GST known as 'Margin Scheme'. Herein in case of the resell of the second hand product, GST will be computed as the difference between purchase value and re-sale price of second hand/used product.

 
Marginal Scheme  Of GST Applies On Purchase Of Old Gold Jewellery

Now the same can happen with the gold jewellery upon it sales and re-purchase. This issue was brought forth by Aadhya Gold (P) Ltd. before the Karnataka Authority of Advance Ruling ("AAR"). Herein the applicant used to purchase the used gold jewellery from common man and sell it as it is without further processing it just after cleaning and polishing it.

So, without any modification made the AAR came to the conclusion that if the jewellery is sold without any modification then GST shall be payable only between the sale price and the purchase price. The ruling shall augur well for gold as GST payable shall be drastically reduced.

GST charged on gold in the current regime

In the current regime, GST is being charged on the gross sale value received from the buyer regardless of the mentioned facts.

Say if ABC purchases some second hand gold jewellery at Rs. 1000 and upon cleaning and polishing further resells it at a price of Rs. 1300 then GST shall be charged on Rs. 300. But this situation or this marginal scheme shall not be applicable wherein gold jewellery is transitioned. Now there is an assumption or it is foreseen that leading industry players may still continue to take the advantage of Marginal Scheme, even when it is applicable or not.

But this would also mean a reduced rate of gold for the end user.

GoodReturns.in

Read more about: gold gst
Story first published: Sunday, July 18, 2021, 7:48 [IST]
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