The Goods and Services Tax, popularly known as GST India, was finally brought to light, on July 1st 2017. The new regime, being comprehensive in nature, completely overhauled the previous indirect tax system, taking into account every miniscule objective, relating to levy of taxes. As a consequence, it transformed the way, transactions and, billings were realised, in major Gold and, jewellery shops, across India.
After a rigorous discussion upon a suitable tax rate on Gold and, Gold jewellery, the government reached on a conclusion to levy, 3% GST on the precious metal. While there were some anticipated apprehensions regarding the tax rate being a tad-bit on the higher side, however, jewellers across the nation, took a sigh of relief, as the tax rate is much lower, as what was initially expected, going by the recent trends in GST India slabs.
Actual Impact of GST on Gold
The introduction of GST to the Indian context had a short term profound impact on Gold prices. The prices rose to a significant 2-month high, accounting for a drastically low physical demand, pertaining to 3% GST, which is levied upon 10% of import duty. In a nutshell, Gold has become expensive, by about 0.75% post the implementation of GST in India.
Earlier, the tax levied upon gold was 1% service tax and, 1% VAT, amounting to 2%. GST has rambled the tax rate upon Gold to 3%.
Impact of GST on Gold Import
GST had a substandard impact on the import of Gold in India. It was reported in media that Gold importers are planning to import 25 tonnes of the precious metal from South Korea, pertaining to the government’s free trade agreement with South Korea, which allows importers to ship in gold without having to pay 10% import duty.
Interestingly, the trade agreement expunges out the 10% import duty on Gold, while on the contrary, GST imposes customs duty of 10% on the import of Gold, a great example of governmental blunder.
How does GST affect the making charges on Gold Jewellery?
The making charges for Gold Jewellery are levied upon 5% GST. Although, GST council had earlier decided to levy 18% GST on making charges, however, when GST was implemented, they decided to restrict it at 5%.
The tax rate on Gold has been increased to 3% GST, from the earlier 2%. Moreover, the making charges stand at 5% GST, although, earlier it was planned to levy 8% GST on making charges, however, it was condemned by many Gold associations in India, which made the government to revert tax rate to 5%.
The Gold prices in India have been hiked a bit; however, it won’t have any great impact on the sale and, purchase of Gold, pertaining to the fondness of Indians, towards precious metals.