Siddhesh J. Bora, CA, CS, LLB

Siddhesh J. Bora

Q. What is the rate of GST for Jewelers ?

For Jewelers :

As per Ch.71 General Rate for Gold and Silver Articles is 3% of which 1.5% is CGST and 1.5% is SGST.  

Format of Tax Invoice :

 Tax Invoice

Q. When registration under GST is required to be taken by  Jewelers?

A. i) Once the aggregate turnover crosses Rs.20 lakh a person becomes liable for registration. Time limit – Within 30 days from the day limit for aggregate turnover is crossed.

Aggregate Turnover means means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess.

ii) Alternatively one may opt. for Voluntary Registration.

Q. What is the definition of Job-worker as per GST Act ?

A. As per sec. 2(68) of CGST law job work means “ undertaking any treatment or process by a person on goods belonging to another registered taxable person and the expression “job worker “ shall be construed accordingly. Thus if the job work is not carried on the goods belonging to a registered taxable person i.e. unregistered person, it cannot be termed as “Job Work” and such activity will get covered by normal supply provisions.

Q. What are the provisions of reverse charge applicable with regards to Job- Work charges ?

A. “Reverse charge”means the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier of such goods or services or both under sub-section (3) or sub-section (4) of section 9, or under sub-section (3) or sub-section (4) of section 5 of the Integrated Goods and Services Tax Act. Thus if supplier of goods / services is unregistered and receiver is registered in that case GST will be paid by the receiver at applicable rates i.e. 5% of Value.

e.g. ABC Jewelers (Registered under GST) supplies 10 kgs of raw gold to D (unregistered), a job-worker for purification, finishing and other ancillary activities. D performs abovesaid work and charges Rs.1000 for above job-work performed by him.

Now in this case ABC Jewelers are registered and availing supply from Mr.D who is unregistered and accordingly tax will be paid under reverse charge by ABC Jewelers @ 5% (applicable rate for Job-workers relating to Jewellery ) and credit of the same is available.

Q. While discharging liability under GST on reverse charge which document/ documents are required to be prepared ?

A. The recipient paying tax on reverse charge basis should issue a ‘ payment voucher ‘ at the time of making payment to supplier. Format for payment voucher is as follows :

ABC Jewellers

Apart from above voucher the recipient paying tax on reverse charge basis on account of effecting inward supplies from unregistered persons, should issue an invoice in respect of the goods or services inwarded, at the time of receipt of such goods or services.

Q.What is the meaning of Composition Scheme and what will be the applicable rate for such scheme in case of Jewelers ?

A. A registered person, whose aggregate turnover in the preceding financial year did not exceed seventy lakh rupees, may opt to pay, in lieu of the tax payable by him as follows :

Category of registered persons

Thus rates are 2% for manufacturers, 5% for restaurant sector, 1% for Traders.         e.g.  If a person is engaged in Trading of Jewellery he will have to pay GST @ 1% on his turnover (provided turnover is below Rs.75 lakhs).

Q. Is there any monetary limit for which GST need not to be paid on the basis of reverse charge even if supply is made by unregistered dealer ?

A. Yes, there is a monetary limit of Rs. 5000/- day. Provisions are as follows :

As per Notification No. 8/2017 the Central Government exempts intra- state supplies of goods or services or both received by a registered person from any supplier, who is not registered , from the whole of central tax leviable thereon u/s 9(4) of CGST Act, 2017:

Provided that the said exemption shall not be applicable where the aggregate value of such supplies of goods or services or both received by a registered person from any or all the suppliers, who is not registered , exceeds five thousand Rupees in a day.

Thus if any supply received from unregistered person / persons in a day is below Rs. 5000/- then even registered person is not required to pay GST.

Q. Suppose if unregistered person sells his jewellery to registered person and its value of supply  is above Rs. 5000/- then whether GST is applicable ?

A. Clarification was given by finance minister that sale of old jewellery by an individual to a jeweler will not attract the provisions of Section 9(4) of the CGST Act, 2017. Therefore, the jeweler will not be liable to pay any tax under reverse charge mechanism (RCM) on such purchases. However, if an unregistered supplier of gold ornaments sells it to registered supplier, the tax under RCM will apply.

Q. If a jeweler sells Gold and also charges making charges say of Rs.500 on above sale what will be the applicable rate ?

A. The above situation is covered under the definition of composite supply which means as follows :

As per sec 2(27), “composite supply” means –

“ a supply is comprising two or more goods/services, which are naturally bundled and supplied in with each other in the ordinary course of business, one of which is a principal supply. The items cannot be supplied separately”.

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In such cases applicable rate will be of Principal Supply. Thus in above case principal supply is sale of gold and not making charges and accordingly applicable rate on whole transaction will be 3% .

Q. What is the procedure for removal of goods to Job Worker premises ?

A. As per sec. 55 : –

A registered taxable person (hereinafter referred to in this section as the “principal”) may, under intimation and subject to such conditions as may be prescribed, send any inputs and/or capital goods, without payment of tax, to a job worker for job-work and from there subsequently send to another job worker and likewise, and shall –

(a) bring back inputs, after completion of job-work or otherwise, and/or capital goods, other than moulds and dies, jigs and fixtures, or tools, within one year and three years, respectively, of their being sent out, to any of his place of business, without payment of tax;

(b) supply such inputs, after completion of job-work or otherwise, and/or capital goods, other than moulds and dies, jigs and fixtures, or tools, within one year and three years, respectively, of their being sent out from the place of business of a job-worker on payment of tax within India, or with or without payment of tax for export, as the case may be:

PROVIDED that the principal shall not supply the goods from the place of business of a job worker in terms of clause (b) unless the said “principal” declares the place of business of the job-worker as his additional place of business except in a case-

(i) where the job worker is registered under section 23 ; or

(ii) where the “principal” is engaged in the supply of such goods as may be notified by the Commissioner in this behalf.

(2) The responsibility for accountability of the inputs and/or capital goods shall lie with the “principal”.

(3) Where the inputs sent for job-work are not received back by the “principal” after completion of job-work or otherwise in accordance with clause(a) of sub-section (1) or are not supplied from the place of business of the job worker in accordance with clause (b) of sub-section (1) within a period of one year of their being sent out, it shall be deemed that such inputs had been supplied by the principal to the job-worker on the day when the said inputs were sent out.

(4) Where the capital goods, other than moulds and dies, jigs and fixtures, or tools, sent for job-work are not received back by the “principal” in accordance with clause(a) of sub-section (1) or are not supplied from the place of business of the job worker in accordance with clause (b) of sub-section (1) within a period of three years of their being sent out, it shall be deemed that such capital goods had been supplied by the principal to the job-worker on the day when the said capital goods were sent out.

(5) Notwithstanding anything contained in sub-sections (1) and (2), any waste and scrap generated during the job work may be supplied by the job worker directly from his place of business on payment of tax if such job worker is registered, or by the principal, if the job worker is not registered.

Q. If Goods are supplied from one branch to another branch whether any GST will be required to be paid ?

A. Stock transfer of goods between two states would be liable to IGST. Stock transfer of goods between two business verticals in the same state where separate registration has been taken for each business vertical would be liable to CGST/ SGST.

Accordingly all transactions qualifying as a supply would be subjected to either levy of CGST/SGST or IGST depending upon whether it is intra state or interstate.Since the registration under GST is based on PAN and there is also state wise registration the stock transfer made from one registration of the taxable person to another registration will be intra state (where the registration is business vertical wise) and interstate in all the cases.

As per Rule 3(5) of the GST Valuation Rules when goods are stock transferred from one place to another of the same business the value of such supplies shall be transaction value. If the taxable person is transferring any goods or services from one branch to another branch in the same state having the same GST registration Number then the taxable person is not required and will not be liable to pay GST on such transactions. If the tax payer has different business verticals in one state it is not mandatory that he should obtain separate registration for each vertical in the state.

Q. How is the movement of goods to be made to job worker? Whether invoice is to be raised?

A. The principal can move the goods to a job-worker place under the cover of a deliver challan containing the details as specified in sub rule 8 of Tax Invoice, credit and debit note rules only if the goods are removed in terms of section 143 of the CGST Act, 2017.

Q. Can the principal avail the input credits on the goods directly sent to job worker’s place?

A. Yes in terms of section 19(2) of CGST Act, 2017 the principal shall be eligible to take credit of input tax on inputs even if the inputs are directly sent to a job worker for job work without their being first brought to his place of business.

Q. Can the job worker sell directly any waste and scrap generated during the job work?

Ans. Yes, subject to payment of tax and job worker is registered otherwise principal has to discharge the tax liability.

Q. Do I have to issue an invoice even if I remove goods for sale on approval basis’?

Ans. In such cases, as per sec. 31(7) tax invoice need not be raised at the time of removal. This is because the removal cannot be said to be made for the purpose of supply to the recipient, as it is not certain (at the time of dispatch of goods) that the sending of goods will result in a ‘supply’. However, on or before the confirmation of the supply by the other party, the tax invoice has to be issued.

The law provides a time limit of 6 months from the date of removal, during which the goods will not be treated as supplied. Where no confirmation is received within such period, a tax invoice should be issued on the day immediately succeeding the 6-month period.

If a person opts for composition scheme which document to be issued to buyer ?

A bill of supply should be issued instead of a tax invoice in case of the following supplies:

> supply of exempted goods or services; or

> supplies made by a composition

Q. What is the Format for Bill of Supply ?

A.

Bill of Supply

Q. What will be the time of supply of goods, generally?

A. Generally, in terms of Section 12 of CGST Act, 2017, the time of supply of goods shall be the earliest of the following:

(a) Date of issue of invoice; or

(b) Due date of issue of invoice; or

(c) Date on which supplier receives the payment; or

(d) Date on which payment is entered in books of accounts of the supplier; or

(e) Date on which payment is credited to the bank account.

Q. What are the returns and its periodicity prescribed under GST ?

Return Form

Apart from above, following returns will be auto – generated at common portal.

Sr.No Return Nature of Return
1 GSTR 1A   Details of outward supplies as added, corrected or deleted by the recipient.
2 GSTR 2A Details of inward supplies made available to the recipient on the basis of FORM GSTR-1 furnished by the supplier
3 GSTR 4A Details of inward supplies made available to the recipient registered under composition scheme on the basis of FORM GSTR-1 furnished by the supplier
4 GSTR 6A Details of inward supplies made available to the ISD recipient on the basis of FORM GSTR-1 furnished by the supplier
5 GSTR 7A TDS Certificate
6 GSTR 9A Simplified Annual return by Compounding taxable persons registered under section 8
7 GSTR 9B Reconciliation Statement

Q. Whether an assesse under composition scheme is required to furnish details of inward supply and outward supply?

Ans. No. An assesse under the composition scheme is not required to furnish details of inward and outward supplies. Such assesses are required to file quarterly returns in Form GSTR-4 within 18 days from the end of quarter.

Q. What are the details that are required to be submitted in From GSTR-4?

Ans. While furnishing the return in GSTR-4, the assesse has to furnish the following details:-

(a) Invoice wise details of inter-State and intra- State inward supplies received from registered and unregistered persons

(b) Import of goods and services

(c) Consolidated details of outward supplies

(d) Debit and credit notes issued and received, if any.

Q. Whether returns have to filed if the assesse has not effected any inward or outward supply during a tax period?

Ans. Section 39(8) of the CGST Act specifies that the periodical return in Form GSTR-3 or GSTR-4 (as the case may be) shall be furnished whether or not any supplies have been effected during the tax period. Here, it is relevant to note that the term supplies”includes both inward and outward supplies.

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4 responses to “GST of Jewelers and Goldsmith- Compilation of FAQs”

  1. Siddhesh Bora says:

    Could you elaborate a situation

  2. Ankit Agarwal says:

    can jewelers avail the input credit on processing loss on gold ?

  3. Siddhesh Bora says:

    As per Rule 55 of Invoice Rules the consignor may issue a delivery challan for the purpose of :

    1) transportation of goods for Job work
    2) transportation of goods for reasons other than by way of supply.

  4. Aditya Poddar says:

    Sir if a jeweller travel with jewellery through Flight , Which document he is required to carry with him. And if the recipient is not known. i.e. On approval basis.

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