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The Kerala jewellers’ association wants the state minister to help fix gold tax at 1.25% under the new GST regime. Representatives of the committee met minister Thomas Isaac to submit a pre-budget memorandum while taking the opportunity to also ask for the removal of the ‘purchase tax’ imposed on gold jewellery in the state.
The same issue had been raised by the state legislature, and Mr Isaac had promised to remove the said tax in the next assembly session.Besides this, the association also called for tax concessions for gold merchants in the budget. Since GST is getting delayed and will be implemented only in the next fiscal, the merchants are worried that they will end up paying compound taxes for the whole year. Meanwhile, the All India Gems and Jewellery Trade Federation has also sent across its suggestions for GST, asking the state government to keep taxes on gems and jewellery at a fixed 1.25%. The India Bullion & Jewellers Association, however, expects the rate to be around 8%, with import duty decreased from 10% to 6%.Also reasd our article on Impact of GST on Gold.
Earlier, the finance ministry had divulged that GST tax slabs would fall at 5%, 12%, 18% and 28%, but the tax on jewellery and bullion does not fall under any of these slabs. This is because the state-levied tax on gold jewellery varies widely across India.
The South Indian states alone account for about 40-60% of gold consumption in India. Kerala has a VAT of 5% on gold jewellery with taxes from gold amounting up to Rs. 400 crores annually, while Tamil Nadu – even with its low VAT rate – collects about 100 crores from gold tax alone. Mr Isaac, who holds significant clout in the GST council of state ministers, said that he would want a tax rate of 4% for gold so that the state does not see any shortfalls in revenue generation in the coming years. The final word on this will now be known only after the meeting of the GST council on 18th February.
While the experts debate on the dos and don’ts of GST, you need to ensure that your business is GST-compliant before the deadline arrives. Here are some things you need to keep in mind:
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