Regarding purchase of old machinery
This query is : Resolved
31 July 2017
If I purchase old machinery for 45000 in cash from unregistered dealer, how much will be gst rate
31 July 2017
Depends on the type of machine you are purchasing
20 July 2025
GST on Purchase of Old Machinery from Unregistered Dealer
Supplier is Unregistered:
The seller (unregistered dealer) does not charge GST since they are not registered under GST.
Reverse Charge Mechanism (RCM):
If you (the buyer) are a registered person (registered under GST), you may have to pay GST under Reverse Charge Mechanism on the purchase of goods from an unregistered dealer, only if the purchase value exceeds ₹5,000 in a single transaction.
Since your purchase is ₹45,000, RCM is applicable.
Applicable GST Rate:
GST on machinery generally falls under 18% (standard rate for capital goods and machinery unless specified otherwise).
Payment under RCM:
You must pay 18% GST on ₹45,000 (i.e., ₹8,100) to the government.
You can claim this input tax credit (ITC) if the machinery is used for business.
Payment Mode & Documentation:
Payment in cash is limited under GST rules: cash payments above ₹10,000 to a single person in a day are prohibited (Section 269ST). So, paying ₹45,000 in cash is not allowed.
Payment should be made via cheque, bank transfer, or digital mode to be compliant.
Summary:
Scenario Details
Seller Unregistered dealer
Purchase Value ₹45,000
GST Rate 18% (on ₹45,000 = ₹8,100)
Payment Mode Should NOT be cash (due to limit)
GST Payment Responsibility Buyer under Reverse Charge Mechanism (RCM)
Important:
Paying ₹45,000 in cash is against GST cash transaction rules. You should request payment via banking channels to avoid penalty.
Supplier is Unregistered:
The seller (unregistered dealer) does not charge GST since they are not registered under GST.
Reverse Charge Mechanism (RCM):
If you (the buyer) are a registered person (registered under GST), you may have to pay GST under Reverse Charge Mechanism on the purchase of goods from an unregistered dealer, only if the purchase value exceeds ₹5,000 in a single transaction.
Since your purchase is ₹45,000, RCM is applicable.
Applicable GST Rate:
GST on machinery generally falls under 18% (standard rate for capital goods and machinery unless specified otherwise).
Payment under RCM:
You must pay 18% GST on ₹45,000 (i.e., ₹8,100) to the government.
You can claim this input tax credit (ITC) if the machinery is used for business.
Payment Mode & Documentation:
Payment in cash is limited under GST rules: cash payments above ₹10,000 to a single person in a day are prohibited (Section 269ST). So, paying ₹45,000 in cash is not allowed.
Payment should be made via cheque, bank transfer, or digital mode to be compliant.
Summary:
Scenario Details
Seller Unregistered dealer
Purchase Value ₹45,000
GST Rate 18% (on ₹45,000 = ₹8,100)
Payment Mode Should NOT be cash (due to limit)
GST Payment Responsibility Buyer under Reverse Charge Mechanism (RCM)
Important:
Paying ₹45,000 in cash is against GST cash transaction rules. You should request payment via banking channels to avoid penalty.
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