WFYI logo

Kerala Jewelers Advocate for Standardized GST on Gold

The Kerala jewellers' association is pushing for a fixed 1.25% GST rate on gold, urging the state minister to consider their pre-budget proposals which also include abolishing the local 'purchase tax'. This move comes as gold and jewellery taxation currently falls outside the standard GST tiers, with significant variations across states. While industry bodies propose differing rates, a final decision from the GST Council is awaited. Businesses are advised to prepare for GST implementation by ensuring compliance before the deadline.

📖 1 min read read🏷️ GST on Gold

Kerala Jewelers Advocate for Standardized GST on Gold

The Kerala jewellers' association has urged the state minister to set a uniform 1.25% Goods and Services Tax (GST) rate for gold under the upcoming tax system. During a pre-budget meeting with Minister Thomas Isaac, committee members also requested the elimination of the 'purchase tax' currently applied to gold jewellery within the state.

The state legislature had previously raised this matter, and Mr. Isaac committed to abolishing the tax during the subsequent assembly session. Additionally, the association sought tax concessions for gold merchants in the budget. Given the delay in GST implementation until the next fiscal year, merchants are concerned about potentially incurring compound taxes for the entire year. Concurrently, the All India Gems and Jewellery Trade Federation has submitted its own GST recommendations, proposing a fixed 1.25% tax on gems and jewellery. However, the India Bullion & Jewellers Association anticipates a rate closer to 8%, along with a reduction in import duty from 10% to 6%.

Gold Taxation Outside the Standard GST Structure

Previously, the finance ministry announced that the GST tax brackets would be 5%, 12%, 18%, and 28%. However, taxation for jewellery and bullion was excluded from these standard tiers. This exclusion is due to significant variations in state-imposed taxes on gold jewellery nationwide.

Southern Indian states collectively represent 40-60% of India's gold consumption. Kerala applies a 5% VAT on gold jewellery, generating approximately Rs. 400 crores in annual gold taxes. In contrast, Tamil Nadu, despite a lower VAT rate, collects around Rs. 100 crores from gold taxation. Minister Isaac, a prominent figure in the GST council, expressed a preference for a 4% gold tax rate to prevent state revenue deficits in the future. The definitive decision is anticipated following the GST Council meeting scheduled for February 18.

Preparing for GST Implementation

As specialists discuss the various aspects of GST implementation, businesses must ensure they achieve compliance before the designated deadline. Key considerations include:

Frequently Asked Questions

What is GST in India?
GST, or Goods and Services Tax, is an indirect tax applied to most goods and services in India. It is a comprehensive, multi-stage, destination-based tax that replaced many indirect taxes previously levied by the central and state governments.
How many GST slabs are currently in effect in India?
Currently, the primary GST tax slabs in India are 5%, 12%, 18%, and 28%. Certain goods and services are exempt, while others, like precious metals and stones, might have specific rates outside these main slabs.
Is GST applicable to gold and jewellery?
Yes, GST is applicable to gold and jewellery in India. However, it often has specific tax rates that differ from the standard four-tier structure, and these rates can be subject to ongoing discussions and revisions by the GST Council.
Who is required to register for GST?
Businesses exceeding a specified turnover threshold (which varies by state and type of supply) are generally required to register for GST. Additionally, certain businesses, regardless of turnover, must compulsorily register, such as those making inter-state taxable supplies.
What is Input Tax Credit (ITC) under GST?
Input Tax Credit (ITC) allows businesses to claim credit for the GST paid on purchases of goods and services that are used for business purposes. This mechanism prevents the cascading effect of taxes, ensuring that tax is levied only on the value added at each stage of the supply chain.

Share Article