• Whenever there is a transaction of supply, you have to pay GST.
  • However, in case of second-hand goods, you have to pay tax on only the margin.
  • Margin Scheme tells us about the difference between the value at which they supply the goods and purchase value.
  • If there is no margin then they will not charge GST. By the help of this scheme, one can avoid double taxation.

Valuation under Margin Scheme

Whenever a taxable supply is provided by a person who is dealing in second-hand goods (margin scheme),

  • if there is no change in the nature of goods; and
  • where no input tax credit is availed for such goods

then the value shall be the difference between the selling price and the purchase price (Margin). In case the value of supply is negative, you can ignore it.


Moreover, Notification No. 10/2017-Central Tax (Rate) New Delhi (dated 28th June 2017) exempts the Intra-State supplies of second-hand goods received by a registered person who

  • is dealing with buying and selling of second-hand goods (margin scheme); and
  • who pays the tax on the value of outward supply of such second-hand goods as determined above.


A company XYZ Pvt Ltd deals in selling and buying of second-hand cars. Thereafter, the company purchases a second-hand car from an unregistered person worth Rs. 8 lakhs and the original price of the car was Rs.10 lakhs. Then the company sells the same car for Rs. 11 lakhs after minor refurbishing. GST shall be levied on the supply of car by the company to its customer for Rs. 11 lakhs and Supply of the car to the company for Rs. 8 lakhs is exempt. The value for GST purpose shall be Rs. 3 lakhs.

If any kind of value added by the way of repair, refurbishing, reconditioning etc., the same shall also be added to the value of goods and be part of the margin. As a result, the person selling the car to the company will not be required to charge tax or issue any tax invoice, hence, the company purchasing the car cannot claim any ITC.

You can get comprehensive assistance on GST Registration and GST Return Filing. You can also use our GST Software for doing end-to-end GST compliance.