This story is from September 25, 2017

Impact of GST on gold and gold jewellery prices

One of the much-awaited tax reforms in India happened on July 1, 2017, that changed the way transactions and billings of the major gold and jewellery shops in the country.
Impact of GST on gold and gold jewellery prices
One of the much-awaited tax reforms in India happened on July 1, 2017, that changed the way transactions and billings of the major gold and jewellery shops in the country.
After a lot of debate on the issue of tax reform in the gold price, finally, a rate of 3 per cent tax was fixed. While some believe that the GST tax rate on gold and jewellery is slightly higher than the previous tax rate, some are happy that at least it is much lower than what was feared initially.

Prior of GST, jewellers used to pay 10 per cent customs duty on gold and 1 per cent excise plus 1.2 per cent VAT over and above that. All of these taxes when summed up equals to 12.43 per cent when buying jewellery and 11.32 per cent when buying bars as there is no excise duty on bars.
With the implementation of GST at 3 per cent for gold and 18 per cent for making charges, the effective rate comes to 15.67 per cent including 10 per cent customs duty.
When compared, the effective price increase on gold jewellery comes to 3.24 per cent and the gold bars will be dearer by 1.98 per cent. Thus, it is clear that gold is going to get a little expensive for consumers in India. But there is unlikely to be any negative impact of GST on gold price as the metal has been a favoured asset for Indians over several decades and will continue to do so.
  1. What is the GST rate on gold jewellery?
    The tax slab for GST was released on 3rd June 2017, where gold was taxed at 3%. This includes all kinds of gold and gold-related jewellery.
  2. What was the tax slab on gold before GST?
    Before GST was implemented, jewellers used to pay 10% customs duty on gold along with 1% excise plus 1.2 percent VAT over and above all that. The comprehensive sum comes out to be 12.43% for jewellery purchase and 11.32% for buying bars. This was changed to 15.67% post-GST that includes 3% for gold and 18% for charges involved in making
  3. Is GST valid for the exchange of gold?
    If there is a sale of old gold jewellery, no GST is implemented on such exchanges. On the other hand, if an unregistered is selling gold ornaments to a registered vendor, GST will be implemented under the reverse charge mechanism. In this scenario, the liability of paying tax is on the receiver of goods and not on the supplier.
  4. Is there any tax on the gold purchase?
    As per Income Tax laws, when selling gold, capital gains are subjected to tax and is based on what kind of gold (physical gold, gold ETFs, sovereign gold bonds or digital gold) is purchased.
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