GST Complaince for Selling Natural river sand

[Komal Agarwal]

Dear Experts,

I am engaged in the business of mining and selling natural river sand. The mining is carried out from a riverbed under a lease granted by the government, for which I pay royalty or seigniorage charges.

The sand is sold in its natural form (without any processing or packaging) directly to end consumers or stockists (trader of sand) mainly for use in construction.

I seek clarification on the following points:

GST on Sale of Sand:

Is GST applicable on the sale of natural river sand to consumers? If yes, what is the applicable GST rate and HSN code for such supply?

GST on Royalty Paid to Government:

As the lease is taken from the government and royalty is paid, is GST applicable on this royalty under the Reverse Charge Mechanism (RCM)? If so, what is the applicable rate?

Input Tax Credit (ITC):

If GST is paid under RCM on the royalty, can the same be claimed as Input Tax Credit against the GST charged on outward supply (i.e., sale of sand)?

Exemption, if any:

Are there any exemptions available either for the sale of natural river sand or for the royalty paid to the government for mining rights?

AI Summary

Natural river sand sold unprocessed taxable at 5% GST (HSN 2505); royalty under RCM 18% GST eligible for ITC Natural river sand mined under a government lease and sold in unprocessed form is taxable at 5% GST (HSN 2505). Royalty/seigniorage paid to the government attracts GST at 18% under the reverse charge mechanism. GST paid under RCM on royalty is eligible as input tax credit and can be set off against GST charged on outward supplies of sand. No exemptions apply to either the sale of natural river sand or the royalty paid for mining rights.