Law Legends


GST On Second Hand Good

Date : 24-04-2023

How to Charge GST on Second hand goods?

We will understand about the second hand goods.  According to Margin scheme {Rule 32(5)}, taxable value of second hand goods is calculated, the person who deals in second hand goods has to pay GST only on the margin amount (sale amount less purchase amount) and If the sale amount is less than the purchase amount then in this case the margin amount will be Nil and no GST amount will be charged.

You cannot transfer ITC on selling second hand goods, which means the person to whom you sell your goods will not be able to avail input tax credit. For eg. ABC sold second hand goods to XYZ and also charged GST on it. So in this case XYZ will not get credit of GST, because XYZ has purchased goods in Margin scheme.


How to calculate the value of supply in Margin scheme and how GST is charged and how the invoice is drafted, we will try to understand with an example –
Example -1

If sale amount more than purchase amount :-

Suppose you deal in sale-purchase of second hand mobile items. You have purchased a mobile from unregistered person of Rs.25,000/-, now you sold that mobile for Rs.30,000/-.

So in this case your value of supply on which GST will be charged will be Rs.5,000/- (30,000-25,000).

There will be no impact of the original purchase price from GST point of view. He has to be ignored.


If sale amount less than purchase amount :-

If you sell the mobile of example -1 for Rs.20,000/-, that is, you sell it at less than the purchase price, then you will ignore the negative value (Rs. 5,000/-) (20,000 - 25,000) and this But there will be no GST charge.

Example -3

Suppose you purchased an old refrigerator from an unregistered person for Rs.10,000/- and spent Rs.5,000/- on its repair & maintenance. After that the refrigerator was sold for Rs.18,000/-

According to CGST Rules, only the purchase price is reduced from the sale price to calculate the value of supply. So in such a case the expense of repair & maintenance has to be ignored. But ITC of the GST charged on expenses will be available. For example, if expenses of Rs.3000/- out of expenses of Rs.5000/- are done through a registered person, then Rs. ITC of that amount will be available on GST charged on Rs. 3000/-.

value of supply : Rs.8000/- (18,000-10,000). In this case Rs. GST will be charged on Rs 8000/-

  Second Hand Goods पर GST की rate क्या होगी ?

In the GST Act (except motor vehicles), there is no difference between New Goods and Second Hand Goods, the GST rate will be applicable on used goods as if they are new goods. You will have to charge the rate according to the HSN Code of your product. For example, if the tax rate on new mobile is 18%, then the rate charged on old mobile will also be 18%.

In how many ways can you issue Invoice:-

Product-Second hand Mobile

Sale price-Rs.1,00,000/-

Purchase price –Rs.90,000/-

QTY-100 pec


Product Name HSN Code Qty Total Sales Price Taxable




Tax Rate Tax Amount (CGST+SGST) or IGST Total Invoice Value
Pre-owned Mobile phone 8517 100 1,00,000 10,000




18% 1800



  * Note to be mentioned in invoice : Pre-owned mobile phones are second hand goods fully/partly exempted under rule 32(5) of CGST Rules, 2017.


Product Name HSN Code Qty Purchase Price Margin*

(sale less purchase price)

Tax Rate Tax Amount (CGST+SGST) or IGST Total Invoice Value
Pre-owned mobile phone 8517 100 90,000 10,000


18% 1800



*Margin= (sale price less purchase price)

*Note to be mentioned in invoice: We declare that this invoice shows the actual price of the goods described and that all particulars are true and correct.  Valuation of Second Hand Goods: As per Rule 32(5) of the CGST Rules, 2017


Product Name HSN Code Qty Total Invoice Value (including Taxes)*
Pre-owned Mobile phone 8517 100 1,01,800

If you do not want to show your margin to the buyer, then you can issue the invoice in this way.

Note to be mentioned in invoice : GST on Taxable value is being duily deposited with the Government on this transaction in terms of Rule 32 (5) of CGST Rules, 2017.

Calculation of total Invoice Value (including Taxes)*

Price 1,00,000
GST on margin 10,000@18% 1800
Total Invoice Value (including Taxes)* 1,01,800

Grounds of our view:-

Section/ rules Involve Rule-32(5) of CGST Rules, 2017 (Margin scheme)

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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