No GST on hostels, old gold, used cars, office gifts: Here’s a list of govt’s clarifications

It’s been two weeks after the Goods and Services Tax was rolled out on the intervening night of June 30 -July 1. The GST was meant to simplify the whole taxation system, however, it has created some confusion among traders and people as to how it will be calculated on some services. The Ministry of Finance has since taken to Twitter to clarify some of the doubts over GST and its applicability. Here are some of the goods and services that won’t attract GST.

GST on sale of old gold jewellery by individuals: 
If you hold jewellery and want to sell it to any gold shop, it won’t come under GST. Revenue Secretary Hasmukh Adhia had said that ‘purchase of old gold jewellery by a jeweller from a consumer will be subject to GST at the rate of 3 percent under reverse charge mechanism.’

The Revenue department further clarified that “even though the sale of old gold by an individual is for a consideration, it cannot be said to be in the course or furtherance of his business (as selling old gold jewellery is not the business of the said individual), and hence does not qualify to be a supply per se.”

“Accordingly, the sale of old jewellery by an individual to a jeweller will not attract the provisions of Section 9(4) and jeweller will not be liable to pay tax under reverse charge mechanism on such purchases,” it said.

GST on sale of old cars or two-wheelers: According to Revenue department, above mentioned (jewellery case) principal will apply on sale of old cars or two-wheelers and no GST will be payable even though the supply would be for a consideration.

Services provided by the Housing Society RWA:
 The government explained that the supply of service by RWA (unincorporated body or a registered non- profit entity) to the members of a housing society or a residential complex are exempt from GST. However, the charges should be less than Rs 5000 per month per member. If the charges are above Rs 5000 per member and the annual turnover of RWA by way of supplying of services and goods is also Rs 20 lakhs then GST will apply.

Services provided by an educational institution to students, faculty and staff: The Finance Ministry refuted the media reports that claimed that 18 per cent GST will be levied on annual fees charged for lodging in hostels. The Ministry said, “This is not true. There is no change in tax liability relating to education and related services in the GST era, except reduction in tax rate on certain items of education.” Services provided by an educational institution to students, faculty and staff are fully exempt under GST.

GST on employers’ gift: The government said that gifts upto a value of Rs 50,000 per year by an employer to his employee are outside the ambit of GST. However, gifts of value more than Rs 50,000 made without consideration are subject to GST, when made in the course or furtherance of business. Gift has not been defined in the GST law. In common parlance, gift is made without consideration, is voluntary in nature and is made occasionally.

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