It's official. Selling old gold, either jewelry or bullion in the form of coins, will attract a 3% Goods and Services Tax (GST) on the value, according to revenue secretary Hasmukh Adhia.
Adhia explained the tax at a GST master class on Wednesday said, "Supposing I am a jeweler. Somebody comes to me with old jewelry, it is as good as buying gold. (But) You can later claim input tax credit.”
The jeweler would be charging 3% in a reverse charge for buying old gold jewelry from a customer. In the event old jewelry gets exchanged while buying new, the total tax will be adjusted against GST, explained Adhia.
In an exchange transaction when the old gold is replaced for new gold the GST on old gold will be deducted from tax payable on new gold, thereby cancelling it out.
Getting your old gold ornaments repaired though is an entirely different affair.
The GST regime that came into effect since July 1, levies tax on gold purchases at 3%, while tax on job works has been pegged at 5%. Hence, any gold jewelry given for modification or repairs will be taxed at this rate.
"If I am saying that take my old jewelry melt it and give me a new one, then it means that trader is a registered person and it is as good as buying gold in form of old jewelry," Adhia explained.
Learn more about GST with Adhia's masterclass here: