Published 7 October 2026
A person selling a used car, old jewellery or household furniture often wonders whether GST is due on the sale. For an individual selling personal belongings, the answer is generally no. The reason lies not in any exemption but in what GST taxes in the first place. This article explains why, and where the position changes.
GST taxes supply in the course of business
GST is charged on a supply, and the core definition, in section 7(1)(a) of the CGST Act, covers:
all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;
The last words do the work. A sale is a supply under clause (a) only if it is made “in the course or furtherance of business”. An individual selling a personal car to another individual is not acting in the course of any business. The sale is outside clause (a), and no GST arises on it.
The guide on supply explains the definition in full, including the other limbs of section 7. None of them reaches a private sale of personal belongings.
Where a one-off sale can still be business
“Business” is defined widely in section 2(17). It includes any trade or “adventure”, “whether or not it is for a pecuniary benefit”, and any transaction in the nature of trade “whether or not there is volume, frequency, continuity or regularity of such transaction”.
The width matters at the edges. Selling a personal car once, after years of use, is not trade. Repeatedly buying cars, jewellery or other goods in order to resell them is, even on a small scale and even if done only occasionally. The test is the nature of the activity, not how often it happens.
Where the activity is a business, the registration rules decide whether GST is actually charged. Many small sellers fall below the registration threshold, which the guide on who must register explains.
Business assets are different
A different rule applies when the thing sold belongs to a business. A car, a laptop or furniture owned by a business and sold off is a sale “in the course or furtherance of business”, and so a supply.
Schedule I to the CGST Act goes further. Paragraph 1 treats as a supply, even without consideration, the “permanent transfer or disposal of business assets where input tax credit has been availed on such assets”. A business that took credit on an asset cannot give it away, or move it into private use, free of GST.
How used-goods dealers are taxed
A dealer who buys used goods from the public and resells them is in business, and its sales are supplies. The law gives such dealers a concession, so that tax falls only on the margin, not on the full price.
Rule 32(5) of the CGST Rules applies where a person “dealing in buying and selling of second hand goods” sells them “as such or after such minor processing which does not change the nature of the goods”, without having taken input tax credit on the purchase. The value of the supply is then “the difference between the selling price and the purchase price”, and a negative margin “shall be ignored”.
For used vehicles, Notification No. 8/2018-Central Tax (Rate) sets the rates on that margin. Since Notification No. 04/2025-Central Tax (Rate), the central tax rate is 9 per cent on every category, or 18 per cent in total with State tax. The concession does not apply where the supplier has taken input tax credit on the vehicle.
The individual who sells to the dealer pays nothing in this chain. Notification No. 10/2017-Central Tax (Rate) also spares a registered dealer from paying tax under reverse charge on used goods bought from unregistered sellers, where the dealer pays tax on its margin under rule 32(5).
Telling the cases apart
The questions, in order:
- Is the seller an individual selling personal belongings, outside any trade? Then the sale is not a supply under section 7(1)(a), and GST does not arise.
- Is the seller in the business of buying and reselling, even occasionally? Then the sales are supplies, and the registration threshold decides whether GST is charged.
- Does the item belong to a business? Then its sale is a supply. If credit was taken on it, even a transfer for nothing is a supply under Schedule I.
- Is the buyer a used-goods dealer? Then the dealer may pay tax on its margin, and the individual seller pays nothing.
Income tax is a separate question, with its own rules on capital gains, and a sale outside GST is not necessarily outside income tax.