What GST applies on auction house commissions and on the sale price — and who pays what?
Auctions generate two separate GST liabilities that must not be confused. The first is GST on the sale of the numismatic item — paid by the buyer on the hammer price — at 12% for banknotes (HSN 4907) or 5% for numismatic coins (HSN 9705). The second is GST on the auction house's commission service — paid on the commission charged to the seller and on the buyer's premium charged to the buyer — at 18% (service). Both liabilities apply simultaneously and are legally separate.
GST on the numismatic item — goods component
When a numismatic note is sold at auction, the sale of the note is a supply of goods. GST applies at the rate applicable to that category of goods: 12% for numismatic banknotes (HSN 4907) and 5% for numismatic coins (HSN 9705). This GST is on the value of the goods supplied — the hammer price. The auction house, acting as agent for the seller, collects and remits this GST.
GST on the auction house's commission — service component
The auction house earns a commission from the seller (typically 10-25% of the hammer price) and a buyer's premium from the buyer (typically 5-20% of the hammer price). Both of these are service charges — fees for the auction service. GST at 18% applies to both the seller's commission and the buyer's premium as services. The auction house is the service provider; both the seller and the buyer are service recipients for their respective service charges.
The agent vs principal effect on GST
If the auction house acts as agent (most common): it collects GST on its commission and on the buyer's premium, but passes through the GST on the hammer price (which is the seller's obligation as the supplier of goods). If the auction house acts as principal — buying lots and reselling them — it is the supplier of goods and bears the goods GST obligation directly, in addition to any service charges.
The GST structure at a numismatic auction — worked example Hammer price for a ₹100 banknote: ₹10,000 GST on hammer price (banknote, 12%): ₹1,200 — buyer pays; seller remits Buyer's premium (15% of ₹10,000): ₹1,500 GST on buyer's premium (18%): ₹270 — buyer pays; auction house remits Seller's commission (15% of ₹10,000): ₹1,500 GST on seller's commission (18%): ₹270 — seller pays; auction house remits Total buyer outlay: ₹12,970. Seller receives: ₹10,000 − ₹1,500 − ₹270 = ₹8,230 |
The grey area — informal numismatic auctioneers on social media
Most Facebook Live numismatic auctioneers and WhatsApp group auction operators are unregistered for GST — their turnover is below the ₹20 lakh threshold, or they are unaware of the registration requirement. For these informal auctioneers, GST on both the goods sale and any service charge is technically applicable if turnover exceeds the threshold. This is one of the most commonly unaddressed tax issues in the Indian numismatic community.
Laws & authorities referenced in this chapter
CGST Act 2017 — 12% GST on banknotes (HSN 4907), 5% on coins (HSN 9705), 18% on auction services
CGST Act 2017 — §2(11) (agent), §2(88) (principal); different GST treatment based on structure
GST Council decisions — numismatic items GST rates confirmed June 2017
Two separate GST liabilities: goods GST (12% banknotes / 5% coins on hammer price) + service GST (18% on commission and buyer's premium). Agent auction house: collects service GST on its own fees; passes through goods GST obligation to seller. Principal auction house: bears goods GST directly. Informal social media auctioneers: GST applies if turnover above ₹20 lakh threshold — widely unenforced but legally applicable. Always request separate itemised invoices for goods GST and service GST.
This is educational content, not legal advice. For a specific situation, please consult a qualified legal professional. Excerpted from Currency, Coins & The Law by Mayank Agarwal, Part 17: Auctions — Formal Houses, Facebook Live & the Complete Legal Framework.