No GST on sale of old gold jewelry, Cars by individuals
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No GST on sale of old gold jewellery, cars by individuals, clarifies govt
- Individuals who want to sell their old jewellery or old vehicles will not have to pay GST as the sale is not for furthering any business, the Revenue department clarified on Thursday.
- Income tax Secretary Hasmukh Adhia had said that ‘purchase of old gold jewellery by a jeweller from a consumer will be subject to GST at the rate of 3 percent under reverse charge mechanism in terms of the provisions contained in Section 9(4) of the Central GST Act, 2017.’
- The income tax dept said 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.”ge. Reuters
- “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. We look forward for your valuable comment www.carajput.com
GST on the sale of old cars
For those interested in understanding who is impacted and required to pay GST on the sale of old cars, CNBC provides a simplified explanation.
Gold Coins/Bars
Buy gold coins/bars for pure investment.
Buy jewellery for personal or family use with emotional value
Pros
- Purity: Usually 22K or 24K, often with certification
- No Making Charges: Value is based almost entirely on gold price
- High Liquidity: Easily sold or exchanged at banks and jewellers
- Investment-Friendly: Closely tracks actual gold market value
Gold Jewellery
Pros
- Dual Purpose: Acts as both investment and wearable asset
- Emotional Value: Especially useful during weddings and festivals
- Buyback Friendly: Most jewellers accept old ornaments
Cons
- Making & Wastage Charges: Can be 8–25%, reducing resale value
- Purity Concerns: May include 18K/20K gold or stones
- Design Depreciation: Trendy styles may lose resale demand
Gold Coin vs Gold Jewellery – Comparison
| Aspect | Gold Coin | Gold Jewellery |
|---|---|---|
| Form | Standardised coin/bar (24K, often 999 purity) | Ornaments, bangles, necklaces, rings, etc. (often 22K, 18K) |
| Purity | Higher purity (close to 24K) | Lower purity due to alloy (to add strength & design) |
| Making Charges | Minimal (only minting charges, ~1–2%) | High making charges (5% – 25% depending on design & labour) |
| GST on Purchase | 3% GST on gold value + 5% on making charges (if any) | 3% GST on gold value + 5% on making charges (higher impact due to labour charges) |
| Liquidity | Easy to sell at bullion dealers, banks, jewellers | Easy to sell but resale value reduced due to making charges deductions |
| Resale Value | Close to market rate (deduction mainly for mint premium) | Resale often at scrap value of gold + deduction for impurities & wastage |
| Use Case | Pure investment | Dual purpose – investment + personal use |
| Storage & Portability | Compact, easy to store | Bulky, needs safe storage |
| Capital Gains Tax | LTCG after 3 years → 20% with indexation benefit | Same as gold coins (treated as “capital asset”) |
| Wealth Tax | (Currently abolished, but earlier applicable) | Same as gold coins |
| TDS | No TDS on purchase (except if bought in cash > ₹2 lakh, PAN mandatory) | Same rule applies |
-
Gold Coins → Better for pure investment due to higher purity, lower making charges, and better resale value.
-
Gold Jewellery → Better for use + emotional value, but not efficient as an investment (loss of value on resale due to high making charges).
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