The finance ministry said that jewellers need not pay 3 percent Goods and Services Tax on old jewellery they buy from individuals, a day after the revenue secretary said such a levy is applicable.
Even though an individual sells gold 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 individual, so the transaction does not “qualify to be a supply per se”, said a ministry statement.
If gold or ornaments are bought from an unregistered supplier, the jeweller will have to pay the tax through the reverse-charge mechanism, the ministry statement said. Under the mechanism, the recipient or the buyer is liable to deduct GST from the payment.
The clarification from the finance ministry states the legal position where such transactions taking place for commercial purposes will be taxed, Sumit Lunker, indirect tax partner at PwC, told BloombergQuint.
However, it will be difficult for the jeweller to identify if the person is making such sale commercially or otherwise.Sumit Lunker, Indirect Tax Partner, PwC to BloombergQuint
The clarification comes a day after the revenue secretary, at GST Masterclass, said buying old gold jewellery from a consumer will be subject to 3 percent GST under the reverse-charge mechanism provisions contained in Section 9(4) of the Central GST Act.
(This piece was first published in BloombergQuint and has been republished with permission)
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