The GST bill is a place of mystery as the government is still figuring out on a lot of things related to this Goods and Services Tax. A new development in the same has put a lot of refurbishing based companies to safe zones.
According to the latest reports by multiple media houses and the government, the buying and selling of second hand goods will not attract Goods and Services Tax (GST) if sold at a price cheaper than the purchase price.
This Margin Scheme can be taken advantage of by any company or individual person who is registered as the one who deals with buying and selling of second hand products (including old and used empty bottles) and who satisfies the conditions as laid down in Rule 32 (5) of the Central Goods and Services Tax Rules, 2017.
What does Margin Scheme mean? In short – margin scheme means that if a product is sold for a loss, then there will be no GST on that sale of the product. Given that the nature of the product is not changed. In the case of buying and selling used products, the products actually cost much higher than the price at which they are sold again for the second time. Hence, there will be no GST on such products.
“This has been done to avoid double taxation on the outward supplies made by such registered people since the people operating under the Margin Scheme cannot avail input tax credit on the purchase of second hand goods,” the Finance Ministry said in a statement.
All these clarifications came out after multiple doubts were raised by organizations and individuals in the context of GST on used or second hand goods.
Just to clarify what exactly is meant by second hand products, here is the definition – A second hand or used good is one that is being purchased by or otherwise transferred to a second or later end user. A used good can also simply mean it is no longer in the same condition as it was when transferred to the current owner.
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