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How to report turnover while filing GST returns when the dealer is paying GST under margin scheme and the turnover required for GST audit?

In respect of second hand goods, a person dealing in such goods may be allowed to pay tax on the margin i.e. the difference between the value at which the goods are supplied and the price at which the goods are purchased, and this is the margin on which GST is to be paid to avoid double taxation. if there is no margin, no GST is charged for such supply.

The amount received by you under margin scheme is the amount of sales and therefore you will have to show the turnover like any other turnover is shown in GSTR 1/ 4 and in GSTR 3B.

And for Audit you will have to see that you fall under the category of regular taxpayer or composite taxpayer or under QRMP scheme. If you fall under regular taxpayer then only you will be eligible for GST Audit.

How to Value Second hand Goods

  • As per Rule 32(5) of CGST Rules, 2017 any person dealing in buying & selling of second hand gods i.e. used Goods as such or after some minor processing which does not change the nature of the goods and where no Input Tax Credit (ITC) has been availed on the first purchase of such Goods then,  VALUE OF SUPPLY = SELLING PRICE - PURCHASE PRICE (no ITC claimed)
  • If this comes positive then GST will be paid and if it comes negative then supply will be ignored and no GST will be paid.
In case any other value is added by way of repair, refurnishing, reconditioning etc. then the same shall also be added to the value of goods and be a part of the margin.

If margin scheme is opted for a transaction of second hand goods, then the person selling the goods shall not issue any taxable invoice and the company Purchasing the goods shall not Claim any ITC.

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