I deal in used cars where I purchase a used car do the necessary repair work and sell it for a profit. My CA has registered me under the composition scheme where I have to pay 1% gst on the sale minus purchase price (profit). However according to gst rule my total profits don’t exceed 20 lakhs in the year which would be my aggregate turnover according to the gst rule for sale of used goods, am I right? However my CA has told me that the turnover is the total sale price of the goods and according to that my turnover was 97 lakhs last year. I would like to understand that since according to what I understand of the gst rule for trade in used goods my aggregate turnover would be the sale minus purchase price or would it be the sale price of the car. If it’s the sale minus purchase price that will be counted as aggregate turnover also then my turnover is not over 20 lakhs in one year so should I opt out of gst composition scheme as well? Would be great If I got a proper opinion from someone. Thank you.
Your CA is correct as turnover always means the amount of gross sales and as per definition provided in Section 2(6) of the CGST Act,2017. The margin scheme is only a valuation mechanism to reduce the tax implication on used goods and it not in any manner can be used to determine aggregate turnover for the purpose of determining as to whether GST registration is required or not under Section 22 of the CGST Act, 2017.
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