Recycling Old Jewellery Will Not Attract GST, Indian Govt. Clarifies

The Indian government clarified that the sale of old gold jewellery to jewellers — a common practice in the country, with the scrap gold value of the old jewellery being offset against a new purchase — will not attract a 3 percent goods and services tax (GST).

The sale of gold jewellery is taxed at the rate of 3 percent under the new GST regime. But the Ministry of Finance clarification noted, “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.”

Accordingly, the sale of old jewellery by an individual to a jeweller will not attract the provisions of Section 9 (4) of the GST act and the jeweller will not be liable to pay tax under reverse charge mechanism (which makes it incumbent on the buyer to pay tax) on such purchases, the ministry said. However, if an unregistered supplier of gold ornaments sells it to registered supplier, the tax will apply under reverse charge mechanism, with the registered dealer being liable for payment of the tax.

An earlier reading of the provision had suggested that the sale of old jewellery would attract GST, which would be levied through the reverse charge mechanism.

The recycling of old jewellery, with its intrinsic value being offset in a new purchase transaction is widespread in the country, particularly during occasions such as weddings and religious festivals.

https://www.gemkonnect.com/news/recycling-old-jewellery-will-not-attract-gst-indian-govt-clarifies

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