We are in to business of buying old condemned Teak and Rosewood furnitures , old door sets , brass utensils etc from freelance brokers , directly from owners/users , villages etc. Then we restore it and then sell it in a showroom. In this case the persons from whom we purchase are just home users and village persons where there is no tax knowledge. In my scenario what kind of Tax is there for me .
Also will these old brass items and artistical doors come under Antiques Or handicrafts etc ?
26 July 2025
Hey Maha! Here's how tax and classification typically work in your scenario of dealing with old wooden and brass items:
### 1. **Tax Implications for Your Business**
* **When you buy old items from individuals (home users, village persons):**
* Usually, these sellers are *not registered dealers* and are unlikely to charge VAT/Sales Tax. * Since these are used goods, purchase is often without tax invoice. * You, as a registered dealer or business, will need to pay **VAT or GST on the sale value** when you sell these restored items in your showroom. * **On the sale side:**
* When you sell restored wooden furniture, brass utensils, or artistic doors, VAT/GST will apply as per the rate applicable to these goods. * If you are in a VAT or GST regime, you need to charge tax on the sale and can claim input tax credit (if you have paid tax on purchase; in your case, maybe not, since sellers are individuals). * **Income Tax:**
* Your profits from the business (sale price minus purchase cost and expenses) are taxable as business income under Income Tax.
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### 2. **Classification of Goods: Antiques, Handicrafts, or Others?**
* **Antiques:**
* As per Customs Act and some sales tax rules, antiques are items that are over 100 years old. * Genuine antiques can have specific tax exemptions or different treatment under customs but rarely in domestic sales tax. * For income tax or GST, antiques are usually treated like normal goods unless specified.
* **Handicrafts:**
* Handicrafts generally mean handmade decorative or utility items, often classified under specific GST/Tax categories with concessional rates. * Restored wooden furniture or brass utensils may or may not qualify as handicrafts depending on the craftsmanship involved.
* **Your old items (wooden doors, furniture, brass utensils):**
* If they are restored antiques, they may qualify as antiques. * If they are crafted or handmade, some may classify as handicrafts. * Most tax departments consider them as **'furniture' or 'household articles'** for taxing purposes.
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### 3. **Practical Steps**
* Maintain **proper bills or receipts** even if from individual sellers (mention item description, purchase date, amount). * Register your business under VAT/GST as required. * Charge and pay applicable tax on sales. * Consult local VAT/GST schedules to check if any concessional rates apply for antiques or handicrafts. * Keep good records of restoration costs as they add to your cost basis.
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If you want, I can help you check the GST or VAT rates applicable in your state for these goods or suggest ways to optimize your tax compliance! Would you like that?
CAclubindia
