5 Features of Goods and Services Tax on Gold in India
Implemented in 2017, the Goods and Services Tax has greatly impacted the prices of several commodities in the country, including gold. It is one of the very few items that come with different GST rates at different levels. Interestingly, GST on gold is levied on both supply of this metal as well as the production of jewellery.
Therefore, consumers interested in purchasing gold must make sure to learn about the gold GST rates in detail. Taking note of the gold GST rate and its impact will help individuals to make an informed purchase.
Key features of GST on gold in India
To understand how this tax is going to affect you or your purchasing abilities in the future, take a detailed look at the significant features of GST on gold –
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Different tax rates
When it comes to knowing about GST on gold, it is important to remember that it is implemented at different rates. The currently applicable GST tax rates on gold are as follows:
5% GST on making charges of gold ornaments.
3% tax rate on gold that is used for making jewellery.
10% duty on imported gold.
This tax structure initially led to an overall increase in the price of gold, following which there was a slump in gold sales countrywide.
2. Exemption
In 2018, the government introduced an exemption for notified agencies that supply gold to GST-approved exporters of ornaments.
The GST exemption in question will serve to make Indian gold exports more competitive in the world market. Although this exemption will reduce the tax burden on gold jewellery exporters, it will not have any significant benefit for the buyers.
3. Extension of tax on the unorganized sector
The introduction of GST on gold has been able to bring the unorganized gold market into the ambit of taxation. A significant portion of gold is annually smuggled into the country through various illegal channels. With the implementation of GST, it is now compulsory for sellers to register the details of every single transaction. This can be considered as one of the latest impacts of GST.
Economic experts believe it is going to increase transparency, accountability, and safety to some extent.
4. GST return filing for gold traders
It is now necessary for gold traders to adhere to the rules of GSTIN generation along with the filing of GST returns. Apart from increased transparency, regular and timely filing of GST returns can help gold traders enjoy smooth access to external financing.
Several lenders provide financial credits in the form of business loans to small and medium business owners to help them meet urgent business requirements. NBFCs like Bajaj Finserv provide these funds without any collateral at attractive interest rates and with minimal documentation.
Further, eligible individuals can enjoy pre-approved offers to simplify the loan application process. You can enjoy such offers on a number of financial products, including business loans, personal loans, and more. Simply provide your name and basic contact details to check your pre-approved offer.
5. The quality of gold will determine the GST amount
Gold jewellery is made of different categories of gold. 24-Karat gold is entirely unsuitable for making ornaments. So, traders use 22K, 18K, or 14K. The GST levied on your purchase will depend on the quality of gold that you are buying.
Moreover, the price of gold changes every day depending on several factors. This can affect the GST on the gold items you purchase.
A brief insight into GST on gold
Gold jewellery is one of the most cherished items in Indian households. As per reports, the gold industry is registering substantial growth, with exports expected to touch as high as $18 billion by 2025.
The manufacturing, selling, and buying of gold and gold items have been largely influenced by the impact of GST on gold. While purchasing this metal, individuals will need to pay GST on making charges. This tax has effectively replaced VAT, Customs Duty, and Central Excise Duty, among many other taxes that were previously imposed on gold.
Also Read: 5 Financial Metrics Help Your Business Grow
The introduction of GST has affected gold jewellery by making it comparatively more expensive. However, it has also paved the way for an increasingly organized gold market in the country.
