Regarding purchase of old machinery

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Ajay Aggarwal

Ajay Aggarwal (Querist)
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31 July 2017 If I purchase old machinery for 45000 in cash from unregistered dealer, how much will be gst rate

CA Altamush Zafar

CA Altamush Zafar (Expert)
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31 July 2017 Depends on the type of machine you are purchasing

Asha Kanta Sharma online

Asha Kanta Sharma online

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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.

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