AMIT BAJAJ ADVOCATE

Press Information Bureau

Government of India

Ministry of Finance

Position regarding applicability of the Margin Scheme under GST for dealers in second hand goods in general andfor dealers in old and used empty bottles in particular.

Doubts have been raised regarding the applicability of the Margin Scheme under GST for dealers in second handgoods 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 isprovided by a person dealing in buying and selling of second hand goods i.e., used goods as such or after suchminor processing which does not change the nature of the goods and where no input tax credit has been availedon 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 marginscheme.

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 determinedunder sub-rule (5)] from any supplier, who is not registered. This has been done to avoid double taxation on theoutward supplies made by such registered person, since such person operating under the Margin Scheme cannotavail 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 theCentral Goods and Services Tax Rules, 2017.