Categories: GST (Goods and Services Tax)

No GST on sale of old gold jewelry, Cars by individuals

Page Contents

Toggle

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).

All about GST Offenses, Penalties, and Appeals

Tags: furtherance of businessGST ON SALE OF OLD JEWELRYREVERSE CHARGE MECHANISMSection 9(4) of the Central GST Act 2017tax on supply of taxable goodstax under RCM

9 years ago

Rajput Jain & Associates

Rajput Jain & Associates is a Chartered Accountants firm, with it's headquarter situated at New Delhi (the capital of India). The firm has been set up by a group of young, enthusiastic, highly skilled and motivated professionals who have taken experience from top consulting firms and are extensively experienced in their chosen fields has providing a wide array of Accounting, Auditing, Taxation, Assurance and Business advisory services to various clients and their stakeholders. Rajput jain & Associates, a professional firm, offers its clients a full range of services, To serve better and to bring bucket of services under one roof, the firm has merged with it various Chartered Accountancy firms pioneer in diversified fields. We have associates all over India in big cities. All our offices are well equipped with latest technological support with updated reference materials. We have a large team of professionals other than our Core Team members to meet the requirements of our prospective clients including the existing ones. However, considering our commitment towards high quality services to our clients, our team keeps on growing with more and more associates having strong professional background with good exposure in the related areas of responsibility.