The GST Council may settle for a 5% tax on gold, a keenly awaited item for discussion in the June 3 meeting, which perhaps will be the last for fitment of rates.
Gold, at present, attracts 12% tax, including 10% import duty. If gold is kept under the 5% bracket, then the total tax incidence on gold will be 15% (10% import duty + 5% GST).
There is a wide divergence between the Centre’s and states’ view on taxing gold. While the Centre wants duty to be lowered to check smuggling, states want it to be around 5% to earn additional revenue on the yellow metal.
Traders on the other hand wish to have a sub-2% GST on gold. The All India Gems and Jewellery Trade Federation has called for a 1.25% GST, but bullion traders wish to have a lower import duty by half.
The GST Council has so far fixed five rates for various goods and services at 12%, 18% and 28%. While the rates of 1,121 items were cleared in the last council meeting in Srinagar, there was no consensus on gold.
At present, the committee of goods and services tax officials is busy holding discussions with industry and other stakeholders on gold, along with other things. But informed sources said that the council may not favour a higher than 5% GST on gold.
Higher taxes will also impact jewellery trade from India. The country may be a net importer of gold, but it is also a significant exporter of gold jewellery.
Source: deccanherald.com