Notification Regarding RCM on Old Jewellery Items: Notification for Reverse charge on gold ornaments, Sale of old jewellery. More explanation on tax in reverse charge on gold accessories; Sale of old jewellery by a private to a jeweller will not make the jeweller responsible to pay tax under reverse charge system on such purchases; However, if an unregistered supplier of gold ornaments offers it to registered provider, the tax under RCM will apply…
In the GST Ki Master Class held yesterday, in among the replies given to an on-the-spot-question, it was notified that purchase of old gold jewellery by a jeweller from a consumer will go through GST @ 3% under reverse charge system in regards to the arrangements contained in Section 9( 4) of the CGST Act, 2017.
On further examination, it is felt that the problem needs to be clarified
Section 9( 4) of the said Act mandates that tax on supply of taxable items (gold in this case) by an unregistered provider (a person in this case) to a registered individual (the jeweller in this case) will be paid by the registered individual (the jeweller in this case) under reverse charge mechanism. This provision, nevertheless, has to read in conjunction with area 2(105) read with section 7 of the said Act. Area 2 (105) specifies supplier as a person supplying the goods or services. Area 7 supplies that a supply is a deal for a consideration by an individual in the course or furtherance of organization.
Even though the sale of old gold by a person is for a factor to consider, it can not be stated to be in the course or furtherance of his company (as selling old gold jewellery is not the business of the said individual), and for this reason does not qualify to be a supply per se. Appropriately, 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 accountable to pay tax under reverse charge system on such purchases. However, if an unregistered supplier of gold accessories sells it to registered supplier, the tax under RCM will use.
Recommended Articles
- Debit Note under GST
- Provisional Assessment under GST
- Credit Note under GST
- GST Rates in India
- GST Invoice Format
- GST Registration
- GST Login
- GST Returns
- GST on Advertisement
- Special Audit under GST
- GST on Govt
- Blocked Credits under GST
