Gst applicablity on sale of old machinery reg

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B SRINIVAS (Querist)
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23 February 2018 Sir we are doing works contract a Pvt Ltd company, we have to sell a old road work machinery is GST applicable on sale of old machinery if applicable at what rate we have to pay gst kindly tell us

CMA Bhavya

CMA Bhavya (Expert)
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23 February 2018 Hi ,
Please note whether you are selling as a Machinery or as a scrap. If you are selling as Machinery the procedure is same you may just note the HSN number of the same and through that you may clear about your percentage of GST. However you need to take care of depreciation claimed earlier .

B SRINIVAS

B SRINIVAS (Querist)
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24 February 2018 Madam this below section will not apply in my case:
According to rule 32 (5) of CGST Rules, 2017 "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.

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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26 July 2024 When it comes to the sale of old machinery under GST, the applicability and rate depend on several factors, including whether the machinery is sold as used or second-hand goods and the nature of your business. Here's a detailed explanation of GST applicability on the sale of old machinery:

### GST Applicability on Sale of Old Machinery

1. **Nature of Transaction**:
- **Sale of Old Machinery**: If your company, engaged in works contract, is selling old road work machinery, GST applies to this transaction. The sale of old or used machinery is treated as the supply of goods under GST.

2. **Rate of GST**:
- **Second-Hand Goods**: For the sale of second-hand goods, including old machinery, GST is applicable at a rate of 18%. However, there are specific provisions for second-hand goods that may allow for a different method of taxation.

3. **Margin Scheme for Second-Hand Goods**:
- **Margin Scheme**: For second-hand goods, you can opt for the **Margin Scheme** under GST. This scheme allows you to pay GST only on the margin (the difference between the sale price and purchase price) rather than the entire sale value.
- **Eligibility**: The margin scheme is available if the machinery was purchased from an individual or from a seller who is not registered under GST and if you are selling it as a second-hand good.
- **Rate under Margin Scheme**: Under the margin scheme, the GST rate of 18% is applied to the margin amount.

4. **Calculation and Documentation**:
- **Calculate GST on Margin**: If opting for the margin scheme, calculate GST based on the margin amount.
- **Example**: If you purchased the machinery for ₹1,00,000 and are selling it for ₹1,50,000, the margin is ₹50,000. GST at 18% would then be applicable on ₹50,000 (i.e., ₹9,000).
- **Maintain Records**: Maintain proper documentation of the purchase and sale, including invoices and records of the margin.

5. **Standard GST Application**:
- **Without Margin Scheme**: If you do not opt for the margin scheme or if the sale does not qualify under the margin scheme criteria, GST will be applicable on the entire sale value of the machinery at the standard rate of 18%.

### Practical Steps

1. **Determine Eligibility**: Assess whether you can apply the margin scheme based on the source of the machinery and the nature of your sale.
2. **Calculate GST**: Calculate GST based on the applicable method—either on the entire sale value at 18% or on the margin amount at 18%.
3. **Issue Invoice**: Ensure to issue a GST-compliant invoice for the sale of the machinery, mentioning the GST amount and rate.
4. **File GST Returns**: Report the sale in your GST returns, including the GST collected and applicable details.

### Summary

- **GST Rate**: The standard rate is 18% on the sale of old machinery.
- **Margin Scheme**: If eligible and opting for the margin scheme, GST is calculated on the margin at 18%.
- **Documentation**: Properly document and report the transaction in GST returns.

Consulting with a GST professional or tax advisor is advisable to ensure accurate application of GST, particularly to clarify your eligibility for the margin scheme and ensure compliance with all applicable regulations.