How to start a second-hand mobile business

Where the profit comes from — and where it goes

• Your margin on a phone is easy to write down: the price you sell at, minus what you paid the seller, minus any parts or repair, minus GST on the margin if you are registered.
• It grows with grading. A phone you can show is in good condition, with its box and bill, sells for more.
• It shrinks fast with one bad buy. A phone that turns out to be stolen can be taken by the police, and the money you paid for it is gone. A tampered IMEI does the same. One such phone can cost more than many good sales earn.
• Returns and disputes also eat into the margin when you cannot show what condition the phone was in and who sold it to you.

What you need to start

Write down each of these with the numbers for your own city — rents and phone prices vary too much for one figure to be honest.

• A counter or shop: rent and deposit.
• Starting stock: the money you will hold in phones at any time.
• Testing: a charger and cables, a SIM to test calls, and the time to check each phone properly.
• Billing and records: a bill for every sale, and each phone's record.
• GST registration when your turnover requires it.

When GST registration is needed. Under Notification No. 10/2019–Central Tax, a business that sells only goods, only within its own state, need not register while its turnover for the year stays within ₹40 lakh in most states; in some states (for example Telangana and Uttarakhand) the limit is ₹20 lakh. If you also do repairs — a service — the limit for you is ₹20 lakh. Selling to another state needs registration from the first sale (Section 24 of the CGST Act). Rules change: check your own case with a CA.

The law before you buy a used phone

Under Section 317 of the Bharatiya Nyaya Sanhita, 2023, dishonestly receiving or keeping stolen property, knowing or having reason to believe it is stolen, is an offence. So what matters at the counter is what you did before you paid:

1. 1Take the seller's identity and a signed declaration that the phone is theirs to sell.
2. 2Check the IMEI. The Government's Sanchar Saathi service has Know Your Mobile (KYM): type KYM, a space, and the 15-digit IMEI, and send it to 14422.
3. 3Match the IMEI on the phone (dial *#06#) with the box and the bill.
4. 4Keep the record with the date and time.

A check that finds nothing is not a clearance. It means only that the records checked have nothing on that phone today.

GST on second-hand phones

A registered dealer can pay GST only on the margin — the selling price minus the purchase price — under Rule 32(5) of the CGST Rules, 2017, as long as no input tax credit was claimed on that purchase.

A day at the counter

Every phone goes the same way: check it, record who sold it, bill it, stock it, and when it sells, record who bought it. Done the same way every time, you can answer for any phone months later.

Mobile Praman is software for this counter routine: an IMEI check against our stolen-device records before you pay, the seller's declaration, the bill, and each phone's record — who sold it to you and whom you sold it to. Billing, stock and GST follow from the same record.

Naming your shop

• Pick a name that is easy to say in your language and tells people you deal in phones.
• Check that no shop near you uses it, and search the Trade Marks registry (IP India public search) before you paint the board.
• Use the same name on your board, your bills and your GST registration.