High GST Will Affect The Gold Demand In India, Says World Gold Council
According to the World Gold Council (WGC), gold demand in India is expected to remain low in 2018 due to the new transparency regulations and higher taxes levied on purchases.
With India being the second-biggest global consumer of gold, a low demand could affect the global rates that rose by 8% since mid-December.
Somasundaram, the MD of World Gold Council’s Indian operations stated that the consumption of gold for this year will probably range from 700 to 800 tonnes.
The demand in India averaged at 840 tonnes for the past ten years. However, with the government imposing higher GST (Goods and Service Tax), the demand is certain to see a lag on gold purchases. The GST on gold in July 2017 was 1.2%, which has been now raised to 3%.
6 February 2018
Gold Imports Triple In India After GST, Demonetisation
India has seen a tripling of its gold imports in August 2017. The country imported 60 tonnes of the yellow metal in August 2017 as compared to 22.6 tonnes for the same period in the previous year. The highest volume of imports was from South Korea as there is no import tax following the introduction of GST on July 1st, 2017.
Due to a loophole that allowed the import of gold from South Korea without payment of import duty, there was a flurry of demand from traders and consumer alike.
However the government has restricted the import of gold from the south Asian country in an effort to rein in the amount of duty-free gold flooding the market.
7 September 2017
Economic survey says GST on gold is too low
As per the Economic Survey Volume -II tabled in the parliament for the year 2016-17, the current GST rate of 3% on gold is apparently too low.
Arvind Subramanian, the Chief Economic Advisor (CEA) and also the author of the survey, wrote that the 3% GST rate of gold and other jewellery products is too low because it is mostly consumed by the rich.
In the report, Mr.Subramanian also spoke about education and healthcare, which don’t come with any GST imposed on them. Commenting on this, the CEA said that leaving out these two sectors is inconsistent with equity as they are consumed disproportionately by the rich as well. Leaving them out of the tax purview altogether is a very bad fiscal move, the report stated.
17 August 2017
GST Brings Fresh Set Of Woes For Jewellery Sector
With the advent of Goods and Services Tax (GST), the jewellery industry appears to be going through a slump. The sector had just recovered from the effects of demonetisation when the government announced the GST on gold.
Surprisingly, it is not the tax rate (3% on gold and 5% on making charges) that is the main grouse, but the procedures. Traders are required to generate an e-way bill to move goods over Rs.50,000 under the new tax regime. As a result, gold traders are finding it difficult since gold is a high-value commodity that is moved multiple times.
Many traders say generating a new e-way bill is impractical for such a small sum of money. In addition, the jewellery sector was not covered under online monitoring systems. As a result, most jewellers are unsure of what norms to follow for the time-being.
29 July 2017
Jewellers Have Mixed Reaction To GST Exemption On Old Jewellery Sale
The government’s announcement of the waiver of GST on the sale of old gold jewellery has been met with a mixed response from jewellers.
Many fear that this will widen the gap between big and small players as well as encourage smuggling of the precious metal.
Jewellers who buy old gold to recycle are exempt from GST but jewellers with a turnover of less than Rs.75 lakh would have to pay 1% when they sell the recycled jewellery.
As the import duty of gold is currently 10%, most jewellers would prefer recycling old jewellery and paying nothing in the way of tax. However, this gold could also be exported since customs duty is much higher than the GST rate of 3% and jewellers would be looking to make a fast buck on the side.
16 July 2017
GST Not To Be Levied On Sale Of Old Gold Jewellery
Gold sold by individuals will not attract GST, which will provide relief to consumers who exchange jewellery.
According to the clarification by the Finance Ministry, selling old jewellery to a jeweller will not attract GST since the gold does not qualify as supply. An unregistered supplier selling to a registered supplier, however, will be required to pay the applicable GST on the items sold.
Under the Goods and Services Act, gold attracts a tax of 3%, with an additional 5% being levied as making charges for custom orders.
14 July 2017
Gold imports rise in June, thanks to new tax laws - GST
There has been an unprecedented rise in the number of gold imports this June as compared to the previous year due to the sudden growth in demand from the retail sector just before the launch of the new taxation system in the country.
The number of imports made this year's stood at 75 tonnes when compared to 22.7 tonnes the previous year, a major climb up. Many say that the number of imports made in July is likely to drastically come down and this may also result in a drop in gold prices.
Analysts say that the consumers were in a hurry to make purchases before July and therefore the demand was unusually high in the month of June.
Generally, the demand for gold is not very high during July because there are no functions or weddings held during this time.
12 July 2017
Bank’s own gold import affected due to GST
The banks importing bullion on account of GST are impacted since they might have to pay more tax than earlier. Under the new GST norms, banks are required to pay 3% additional indirect tax that has increased from the previous figure from 10% to 13%. The increase has become a deterrent for many banks and it might impact the demand for gold significantly. Banks are now hesitant to import gold on their own account.
4 July 2017
GST Council Looking At Raising Gold Tax To 5% In Future
The GST Council is considering a tax hike on the GST applicable on gold. Following the polarising opinion after the rate was declared, the council could raise the rate to 5% from the current 3%.
Divisions over the rate prevailed until a consensus of 3% was reached, but there is still disagreement over the tax slab. More than half of the states opted for a flat rate of 5% on gold, but the rest campaigned for 2%.
In order to appease the opposing factions, a compromise was reached, with the rate fixed at 3%.
The present rate of gold taxation stands at 2% which comprises 1% excise duty and VAT at 1% (VAT rates differ from state to state).
13 June 2017
Analysts Fear GST Could Impact Jewellery Sector
The Goods and Services Tax (GST) could negatively impact jewellers’ working capital, which would affect profits, fear analysts. The inverted duty structure would eat into jewellers’ profits as they would be collecting lower taxes from customers than the amount they would have paid to buy the gold. This is a result of customers having to pay 3% GST on gold, while the tax on making charges has been fixed at 18%.
With the majority of jewellers relying on manufacturing units since they do not operate their own, the costs associated would rise significantly.
Jewellers would be required to file a refund for the extra GST paid. However this would result in 87% of the working capital to the industry being blocked. The jewellery industry has appealed to the government to clarify the applicable rate for making charges, and also appealed for that rate to be fixed at 3% to make compliance easier.
11 June 2017