Margin scheme related query

Great set of questions on the GST margin scheme! Let me answer each one carefully:

Query 1: Is any form filing or intimation required to GST Department for opting margin scheme?

• No specific form or intimation is required to opt for the margin scheme under GST.

• The dealer can start applying margin scheme from the invoice of sale by treating the transaction accordingly.

• However, proper record keeping is essential to support the application of the margin scheme during assessment.

Query 2: Can he purchase second hand goods from a registered dealer or only from an unregistered person for opting margin scheme? Can GST be claimed on second hand goods purchased from a registered dealer?

• Margin scheme can be applied both on purchases from registered and unregistered dealers.

• If purchased from a registered dealer, the purchaser can claim Input Tax Credit (ITC) on the GST paid on such purchase.

• If purchased from an unregistered dealer, no ITC is available.

Query 3: Can the second-hand goods dealer choose both margin scheme and normal transaction scheme in the same financial year? Any restriction or separate registration needed?

• A registered dealer can apply both schemes in the same financial year.

• There is no restriction or need for separate GST registrations for using margin scheme and normal scheme.

• The dealer must maintain separate records for goods supplied under margin scheme and normal scheme.

Query 4: Can a registered person deal in new products under normal GST and second-hand goods under margin scheme under the same GST registration? Any restrictions?

• Yes, a registered person can deal in both new goods (normal GST) and second-hand goods (margin scheme) under the same GST registration.

• No separate registration is required.

• Proper accounting and invoicing must be maintained separately.

Query 5: If a registered person opts for margin scheme, what type of invoice should be issued? Tax Invoice / Bill of Supply / Invoice cum Bill of Supply?

• Since the supply is taxable, the dealer must issue a Tax Invoice under GST.

• The invoice must clearly indicate that margin scheme is being applied (can be mentioned in the invoice descripttion).

• Bill of Supply is only for exempt or non-taxable supplies; not applicable here.

Query 6: If a registered person purchases second-hand goods from a registered dealer who has opted for margin scheme, can he claim ITC on such second-hand goods? Any restriction?

• The selling dealer under margin scheme does not charge GST on the full value but only on the margin.

• Hence, the purchase invoice will reflect GST only on the margin portion.

• The purchasing registered person can claim ITC only on the GST charged in the purchase invoice, i.e., GST on margin.

• If the seller has applied margin scheme properly, the input tax credit will be accordingly limited.

Summary Table: