No GST on sale of old jewellery

Sanjeev Sharma

Tribune News Service

New Delhi, July 13

The government on Thursday issued three clarifications on GST applicability on sale of old jewellery, housing societies/RWA and hostel accommodation to clarify the status.

It has clarified that sale of old jewellery by an individual to a jeweller will not make the jeweller liable to pay 3 per cent GST under reverse charge mechanism (RCM) on such purchases.

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However, if an unregistered supplier of gold ornaments sells it to registered supplier, the tax under RCM will apply.

In the ‘GST Ki Master Class’ held yesterday, in one of the replies given to an on-the-spot question, it was informed that "purchase of old gold jewellery by a jeweller from a consumer will be subject to GST at 3 per cent under reverse charge mechanism in terms of the provisions contained in Section 9(4) of the CGST Act, 2017".

On further examination, it is felt that the issue needs to be clarified, the government said.

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, the government said.

It clarified that services provided by the Housing Society Resident Welfare Association (RWA) will not become expensive under GST as there is no change made to services provided by the housing society (RWA) to its members in the GST regime.

The supply of service by RWA (unincorporated body or a registered non-profit entity) to its own members by way of reimbursement of charges or share of contribution up to an amount of Rs 5,000 per month per member for providing services and goods for the common use of its members in a housing society or a residential complex are exempt from
GST.

Further, if the aggregate turnover of such RWA is up to Rs 20 lakh in a financial year, then such supplies would be exempted from GST even if charges per member are more than Rs 5,000.

The RWA shall be required to pay GST on monthly subscription/contribution charged from its members if such subscription is more than Rs 5,000 per member and the annual turnover of RWA by way of supplying of services and goods is also Rs 20 lakh or more.

It also clarified that no GST is levied on annual subscription and fees charged as lodging and boarding charges by educational institutions from its students for hostel accommodation.

Services provided by an educational institution to students, faculty and staff are fully exempt from GST.