Selling old Gold jewellery: Understand GST rules & tax implications
GST On Gold sale: Individuals selling personal old jewellery to a jeweler are exempted from GST as it's not considered a business transaction. However, buying new gold attracts 3 per cent GST.
New Delhi: Gold prices have skyrocketed over the last one year and touched record levels. Several people have tried to cash in on the high prices by selling their old jewellery. However, many people would be wondering whether GST will be applicable on the transactions while selling old necklaces, bracelets, or bangles.
Gold Buying and Selling: Know the rules
Buying gold jewellery attracts 3 per cent GST. The tax is the same for both 22-carat and 24-carat gold. This means that if an individual buys new jewellery or gold coins, 3% tax will be levied. However, rules change if someone opts for the purchase of old gold.
GST is not levied if a common man sells his old jewellery to a jeweller. If a registered dealer or an unregistered gold trader sells it, GST is applicable. When the jeweller sells the old jewellery again, 3 percent GST is charged on it.
"Even though the sale of old gold by an individual is for a consideration, it cannot be said to be in the course of 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,” the ministry had clarified in a statement.
Whether old gold jewellery sold by an individual to a jeweller will be taxed under reverse charge mechanism?
Central Board of Indirect Taxes and Customs states, "No, 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. 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 on such purchases.”
Whether old gold jewellery sold by an unregistered supplier will be taxed under reverse charge mechanism?
"Yes, as the sale is for consideration and is in the course or furtherance of business of such unregistered supplier,” Central Board of Indirect Taxes and Customs says.
The GST Council, led by Finance Minister Nirmala Sitharaman, approved rate rationalisation and simplified the indirect tax regime in the country by adopting a three-slab structure — 5%, 18%, and 40%.