The Goods and Services Tax (GST), which will be brought in on July 1st, 2017 will usher in a new era in taxation in India and investors, manufacturers as well as consumers have been waiting with bated breath for news regarding the new tax slabs. With GST set to replace taxes such as VAT (value Added Tax), Central Excise Duty and Customs Duty among other taxes, the government has proposed 3 tax slabs under the new tax regime.
The GST for gold was fixed at 3%, with an additional 8% tax levied on making charges. The tax on the making charge was then reduced to 5% due to concerns raised by various groups.
Gold Rate After GST
The price of gold following the adoption of the Goods and Services Tax (GST) regime has seen some fluctuations. Analysts were apprehensive that the tax would lead to a decline in demand for gold due to the high incidence of taxation.
At present, gold prices are seeing a rise due to unstable markets in spite of the additional tax burden. While the overall price of gold has risen, this has been due to the import duty associated with the metal, which has been retained. As a result, gold continues to attract an import duty of 10%, in addition to the 3% GST and 5% making charges GST.
The price of gold after GST has been steadily increasing due to higher demand for the yellow metal in overseas markets. The plunging U.S. dollar has led to higher volumes of trade in the metal, thereby increasing its value.
Long-term outlooks regarding the gold rate in India after GST appear to be mostly positive. Fears of increased smuggling due to the high costs associated with buying the metal abound, but it remains to be seen if these will come to pass. For the moment, the jewellery sector appears to be content with the price of gold after GST, though consumers have a few complaints over the rising cost.
GST on Gold Purchase
The tax slabs were announced on June 3rd, 2017 and gold will be taxed at a rate of 3%. In other words, all gold and gold-related jewellery would be taxed at a flat rate of 3%, which would be borne by the end consumer.
GST on Gold Making
In addition to this, the government has also levied a 5% tax on making charges. At present, there is no tax on making charges, which account for close to 12% of the actual cost of the gold.
The tax on making charges was initially fixed at 18%, but appeals from Indian jewellery councils and bodies to reduce the rate resulted in the government fixing it at the present 5%.
A higher tax on making charges would have increased the burden on consumers, since the added cost would have been passed on to them. The initial rate of 18% would have also resulted in consumers having to pay close to 4% as tax.
Jewellery bodies and councils have lauded the change in rate and are confident that it will result in greater transparency in the gold manufacturing market.
FAQs on Goods and Services Tax (GST) on Gold
- How much is the GST charged on gold in India?
A GST of 3% is charged on gold in India. Moreover, jewellers charge 5% of the price as GST making charge.
- Can GST on gold be claimed?
In case you are a registered jeweller, then you can claim an input tax credit of 2% on making charges of jewellery.
- Is there any way to save GST on gold?
In case you are selling old gold jewellry and purchasing new gold jewellry in a single transaction, no GST will be charged. This means that individuals can save on GST tax by simply exchanging old gold items with new gold.
- How much gold is tax-free for women in India?
In India, a married woman can have up to 500 grams of gold and an unmarried woman can have up to 250 grams of gold.
- How much tax is charged on digital gold?
A 20% tax is charged on digital gold.
- How much is the GST charged on silver articles and jewellery?
A GST of 3% is charged on silver articles and jewellery.
- How much GST will be charged on gold coins?
A GST of 3% will be charged on gold coins.
- Is eWay bill required for transportation of gold?
No, eWay bill is not required for transportation of gold according to the CGST Rule 138(14).
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