"Understanding GST: Tax Implications of Exchanging Old Jewelry for New"

There are two transactions here. Exchange of old jewelry by an individual and sale of new jewelry by the gold shop to the individual who gives old jewelry instead of making payment to purchase jewelry. It is called consideration which is equal to money required to purchase jewelry.

Individuals not in the course of business, when exchange old gold jewelry for new gold jewelry, need not pay GST on old jewelry but GST at 3% is payable on new jewelry by the gold shops selling jewelry. The GST 3% is to passed on the customer as GST is an indirect tax.

To attract GST on any transaction subject to threshold limits, there must be a supply as defined under Section 7 of CGST Act 2017. Supply includes sale, exchange, barter etc are to be made in the course of business.