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GST - Margin Scheme - buying & selling of second hand goods - Govt clears doubts

By TIOL News Service

NEW DELHI, JULY 15, 2017: DOUBTS have been raised regarding the applicability of the Margin Scheme under GST for dealers in second hand goods in general and for dealers in old and used empty bottles in particular.

Rule 32(5) of the Central Goods and Services Tax (CGST) Rules, 2017 provides that where a taxable supply is provided by a person dealing in buying and selling of second hand goods i.e., used goods as such or after such minor processing which does not change the nature of the goods and where no input tax credit has been availed on the purchase of such goods, the value of supply shall be the difference between the selling price and the purchase price and where the value of such supply is negative, it shall be ignored. This is known as the margin scheme.

Further, notification No.10/2017-Central Tax (Rate), dated 28.06.2017 exempts Central Tax leviable on intra-State supplies of second hand goods received by a registered person, dealing in buying and selling of second hand goods [who pays the central tax on the value of outward supply of such second hand goods as determined under sub-rule (5)] from any supplier, who is not registered. This has been done to avoid double taxation on the outward supplies made by such registered person, since such person operating under the Margin Scheme cannot avail input tax credit on the purchase of second hand goods.

Thus, Margin Scheme can be availed of by any registered person dealing in buying and selling of second hand goods [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.

 


 RECENT DISCUSSION(S) POST YOUR COMMENTS
   
 
Sub: Margin Scheme - Value for Composition Scheme

Since the value is equal to the difference between Sale Price and Purchase price, would it not be correct to consider the same value for all the following three:
1. The value on which a trader under composition would pay tax @1%
2. The value for computing 'aggregate turnover' of Rs. 75 lakh of the preceding year
3. The value for computing 'aggregate turnover' of Rs. 75 lakh for the current year

As per sec 2 (6) the 'Aggregate Turnover' means the aggregate "value" of .....
In turn "value" would be equal to the margin in terms of rule 32 (5)

Sanjay Dwivedi

Posted by Sanjay Dwivedi