The GST Council has fixed Gold rates under GST at 3%. The tax rate is lower than the lowest slab of 5% and is closer to the current tax of about 2%. The government has definitely kept in mind the demand of the gold industry.
“There was extensive debate on Gold rates under GST was between 2% and 5%, there was almost a vertical division. A consensus has reached at 3%,” Mr. Arun Jaitley said.
Points to ponder on:
- The chief economic advisor reports a subsidy on gold of Rs 10,800-crore
- The government will recover an additional Rs 6,000 crore from this industry
- Subsidy on gold would hence come down, considering an annual consumption of 700 tonnes
- Customs duty is still present on gold under GST norms
NOTE: The GST council has not announced a similar GST rate of 3% on making charges of jewellery. So, GST rate on making charges of jewellery falls within the 5% tax bracket.
Comparison of Gold rates:
GOLD RATES FOR MAKING JEWELLERY
- Assuming gold price remains unchanged
- Price of gold taken on 6th June’2017 (all over India)
- Making Charges = 12% of (gold price+ custom duty)
- The industry also needs clarity on standardized billing procedures in the country for selling gold jewellery, as some jewellers show making charges separately, while others include them in the price.
- The international norms says, “That making charges, wastage, and stones, among other things, must be shown separately in the sales invoice at the time of selling gold jewellery”.
- It is important to understand that most jewellers do not have their own manufacturing unit, so they would be paying 5% GST to workers making jewellery and collecting only 3% from the customer.
However, the industry has welcomed the government’s decision and is hoping this will not affect their business. Jewellers across the country are happy with the 3% tax rates on gold jewellery GST. It is a great relief for the gold sector that GST on making charges is just 5%.
To get a detailed view on other rate changes, click here.
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