GST on Gold

The issue about taxation on gold was much debated and finally a rate of 3% is fixed. While there exist no such rate under the GST, a special rate of 3% has been introduced for Gold items given the importance of Gold in our country.

Although this GST rate makes gold slightly expensive from the previous regime, still it is significantly lower than the rate which was thought of being fixed. As a result, it is whole heartedly welcomed by the Industry.

Due to a slight increase in tax, the demand may fall initially but we expect that passdown to retail consumers will not be much of an issue over a period of time.

And the best thing is, there will be no GST levied if an individual person returns gold to a jeweler to buy something new.

It was feared that since GST is levied on supply, returning jewellery to the jeweler for consideration would attract GST. But it has been clarified by the GST council that no GST will be levied when an individual returns jewellery even for consideration.

However, it must be noted that when an unregistered dealer returns jewellery to a registered jeweler, GST would be paid on reverse charge mechanism because it is in furtherance of business

Conclusion : While there are still concerns in certain areas due to lack of clear detail, these initial hiccups are unlikely to impact the industry to a very large extent. Gold has been a favoured asset for Indians over several decades and demand from GST is unlikely to be negatively impacted.