Goods and Services Tax, also known as GST, is a consumption tax that is imposed on goods and services supply in India. Implementation of GST has brought in a drastic change in the trading and purchasing of gold. A rate of 3% is applied as GST on gold along with an additional 5% on making charges.
Effects of GST on gold
Implementation of GST has affected gold making in many ways, such as:
GST has been implemented in an attempt to improve the financial condition of India by minimising the illegal import of gold.
Retailers have to complete a GST registration procedure mandatorily to be enlisted among the gold jewellery company of India and to attain a unique GST identification number, failing which his/her business can be labelled illegal.
Along with the 3% charged on gold and 5% on making charges, an additional 10% is applicable as customs duty charge, causing this precious metal to be slightly on the expensive side.
This hike in prices due to GST has resulted in a decrease in demand a little.
Customers tend to shift from the purchase of physical gold to sovereign gold bonds.
Customers are seen to ensure the sellers’ GSTIN or hallmark of gold to ensure authenticity prior to purchase.
Implementation of GST on gold has marginally reduced the sales of unregistered gold dealers, which incidentally is the aim.
GST was introduced as an attempt to benefit the organised sector of gold, thus encouraging a shift from an unorganised sector of gold to the organised sector.
GST implementation has successfully reduced the sales of illegally imported gold, thus bringing in transparency to the supply chain. This transparency has proven to be beneficial for both customers and retailers. It is mandatory for all gold traders to register themselves via the GST portal.