The Karnataka bench of Authority for Advance Ruling (AAR) observed that Gods and Service Tax (GST) is payable only on the margin between the sale price and the purchase price
The ruling was made in reference to the application filed by Aadhya Gold Pvt Ltd seeking clarity whether GST is to be paid only on the difference between the selling price and purchase price as stipulated under Rule 32(5) of CGST Rules, 2017, if the applicant purchases used or second-hand gold jewellery from individuals and there is no change in the form or the nature of goods at the time of sale.
The AAR noted that the GST is payable only on the margin between the sale price and the buying price, as the applicant was not changing the form of the jewellery to bullion and then to new jewellery, but was only cleaning and polishing it without changing its nature and form. According to experts, the development would reduce the GST payable on resale of used jewellery. "In case of applicant dealing in second hand goods and invoicing his supplies 'second-hand goods', the valuation of supply of second-hand gold jewellery which are purchased from individuals who are not registered under GST and there is no change in the form and nature of such goods, can be made as prescribed under sub-rule (5) of Rule 32 of the GST rules," it said.
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