With the latest GST rates in place, the gold market is heading towards a stable state as it was struggling with higher tax burden before the council meeting. The prices of gold were under control and now we see almost an equal GST slab rate on all golds. With a similar development in other metals like silver, platinum and palladium their demand will also increase with their lower prices, thus offering good business opportunities for commodity traders.
Latest Update in GST Impact on Gold Industry
India’s central government is planning to increase the Goods and Services Tax (GST) rate on gold jewellery from 3% to 5%. The move will likely disturb the already struggling gold jewellery industry after the covid lockdowns and customer non-responsiveness.
Gold prices in India rose this week after the implementation of a new goods and services tax (GST) system and traders said they see no material impact on demand going forward despite the higher taxation. Indian Finance Minister Arun Jaitley announced last week that gold would be taxed at three percent, while a newly created GST Council will now set the final rate on other precious metals such as platinum and silver.
The GST council is announcing the new rate which will take place from July 1 at 5% for gold dealers. If you are into jewelry business and are looking for a GST on gold, then this news will be a positive outlook for you. This fifth tax bracket will surely give benefits to all the jewelry dealers providing that the making charge is not priced separately.
The industry has been talking about the need for standardized billing for a long time, and this is one area where there is no clarity. As per the international rules and regulations, making charges, wastages and stones must be presented in the invoice in a separate section from the cost because these have nothing to do with the total cost of what they are buying.
It has been a huge relief for the precious metal industry of India and its customers as the government has decided to keep the current three percent tax rate for gold under GST. The Indian Bullion and Jewellers Association which was demanding a zero interference with current tax structure has got a ready ear from govt. Therefore, from next year onwards, gold customers will have more reason to smile.
GoM Decides to Levy 3% GST on Old Gold & Jewellery
Central government wants to levy a tax on old gold, to be used for education, health and social welfare. This will help raise funds for the government, who are running at a deficit and need money to run projects in healthcare and education. But some states such as Tamil Nadu are opposed to the proposal as they feel that this would adversely affect local jewellery makers, who have begun an open protest against the move.
Exports in Trouble Due to GST on Gold
India is the largest importer of gold in the world, with almost 50% of global imports. Since last year, gold has been taxed at 3%, which has made it difficult for jewellery makers to sell their products. The problem is compounded by the fact that there is a cap on how much gold one can buy, which makes it difficult to make profit when buying gold from allocated agencies unfamiliar to the customer. Since this is an expensive industry, we hope that our demands get heard and GST tax is lowered.
Chairperson also pleaded for the acceleration of refund process as the export industry needs capital for daily work process and issues in refunds leads to bigger problems in daily work schedule. The implication of 3 per cent GST on gold has created an issue within the gold industry and needs an immediate call to action over it.