The gems and jewellery industry on Saturday welcomed the Centre’s decision to keep the goods and services tax rates (GST) for gold at 3 per cent, which is almost in the same range being levied by most of the states at present.
While most of the states have been levying between 2-2.5 percent tax on gold purchase, Kerala is the only state which has a tax rate of 5 percent.
“This is a landmark day for the jewellery sector as the government rightly kept the overall tax burden low in the industry, keeping in mind the unique characteristics of the gems and jewellery sector, the ‘kaarigars’ and small jewellers,” All India Gems and Jewellery Trade Federation (GJF) Chairman Nitin Khandelwal said in a statement.
He said this GST rate would help the gold and jewellery trade and it would mature as an organised sector in the years to come.
“In fact, this move will encourage the industry to become more organised and transparent,” Khandelwal said.
The GST Council at a meeting on Saturday decided to tax gold at 3 per cent as part of the proposed GST regime.
Meanwhile, World Gold Council Managing Director, India, Somasundaram PR said GST is the single biggest indirect tax reform in India and is intended to bring transparency, increase tax compliance and improve transaction traceability.
“The government’s decision to apply 3 percent GST on gold is an encouraging step in the current context to stabilise the industry and address the concerns of the millions employed in the industry,” he added.
However, he said, with 10 percent customs duty the total tax on gold is still high and will continue to have an impact on the jewellery industry.
“This may be an opportune time for the government to cut the import duty and bring down the total tax on gold significantly lower so unauthorised imports are totally eliminated and industry embraces transparency in letter and spirit under GST,” he said.
India Bullion and Jewellers Association (IBJA) Director and PNG Jewellers CMD Saurabh Gadgil said the declaration of GST for the gems and jewellery sector at 3 percent for gold articles and polished diamond and 0.25 percent on rough diamond is very positive move by the government.
“It will boost the organised players and trade, it is also a boon for the consumer and the government will also benefit as more and more players will become organised by complying to GST. We feel it is a win-win (situation) for everyone,” added Gadgil.
Kerala-based Kalyan Jewellers Director Rajesh Kalyanraman said the industry welcomes the 3 percent GST, however, 2 percent would have been better.
Currently, the industry pays taxes around 2-2.5 percent so 3 percent is almost as good as no impact by the taxes, WHP Jewellers Director Aditya Pethe said.
“Majority of the gems and jewellery sector is unorganised and a lot of players are in the rural regions too.
With this taxation, many unorganised players will be encouraged to enter the organised trade. Overall, the bill does not seem to have an inflammatory impact as most of the rates are revolving around the current tax brackets,” he added.