If implemented, a buyer of gold jewellery will end up paying around 6 percentage more by way of tax as at present the total tax comes to around 12.5%.
MUMBAI: The Goods and Services Tax Council, which will decide the GST rates, has discussed levying 16% GST rate on gold jewellery, cutting customs duty on gold to 2% from 10%, and levying 4% GST on gold bullion, two persons privy to the discussions told ET.
If implemented, a buyer of gold jewellery will end up paying around 6 percentage more by way of tax as at present the total tax comes to around 12.5%, but the proposal will discourage smuggling as the cost to import gold will fall by 4 percentage points to 6% — 4% GST and 2% customs duty. The move will ensure the Centre will not suffer any tax loss while states will get much more than the present 1% VAT on gold. Here’s how.
The Centre currently gets 10% through customs duty. If duty is cut to 2% and GST of 4% is levied on gold, half of the GST will go to states and Centre gets a total of 4% —2% GST and 2% customs. And when states collect 12% GST on gold jewellery (adjusting for input credit) revenue sharing will enable the Centre to get half, or 6% . So, the Centre will continue to get 10% by way of tax. “Jewellery being a luxury item, you’re going to have to pay more to buy it,” said one of the persons cited earlier.
“It’s lesser if you buy a (gold) bar or a (gold) biscuit which means that holding as a financial vehicle will cost you less,” the person said.
News Source : indiatimes.com