The imposition of GST on gold and other precious metals is positive for the consumers of India. As a result, the gold jewellery prices will decrease. This is because the existing taxes are levied by the centre and the state ECOWAs will be subsumed in one tax under GST, i.e., GST. GST has been a long-awaited reform as it will simplify tax structure, reduce black money and corruption as well as check cross border smuggling of products. Thus, benefits for consumers are manifold and can be expected.

gold jewellery price

However, certain products such as diamond jewellery attract a minor cess of 0.25% on top of the 10% import duty plus 2% gold cess and 0.5% GST (total 12.75%). Similarly, rough and polished diamonds attract a 0.2% cess on the import price excluding freight. Therefore, rough diamonds attract an import duty of 10% plus 2% gold cess plus 0.25% diamond cess plus the 2% central sales tax (CST) (@ 4% total). And polished diamonds attract a 10% land customs duty and a 1% excise duty (11%) plus 2.5

Why were jewellery companies impressed?

It is a positive move for the Indian gold industry as it will help increase transparency and formalize its economy. The impact of this on jewellery companies depends on how efficiently they manage their supply chains, says Vijaybhaskar Nair, Manager-Marketing, Titan Company Limited.

According to him, since jewellers operate at a very high level of gross margins, the tax rates are more likely to have some impact on the consumer’s buying decision. But he said: “GST implementation has come at a period when gold market has already been seeing some slowdown and therefore impact from GST is likely to be limited

Summing up the key implications of the GST rate of 3% on gold

The upcoming GST regime will not come as a big surprise to the gold market. The sector is already in an environment, wherein prices are being regulated through NMETL, Gold Monetisation Scheme and modified Forward Contracts (MFCs). The GST is similar to NMETL and MFCs, wherein the current price of gold is determined by the Centre and the states deciding on whether it should be raised or lowered. Once GST is implemented the price determination power of these will be completely shifted to the states.

Don’t forget the advantage of seamless input tax credit (ITC)

Mitigating the impact of a higher tax is the fact that the new regime pre-supposes seamless ITC. Even if there is an instance where the tax rate has gone up, this can be offset by crediting it to earlier unavailed taxes paid on inputs. CAs say the move will actually boost enterprise activities as small companies, especially MSMEs, which were not registered for VAT earlier and hence used to forego ITC on their purchases, will now get full input tax credit under GST. Using a gold price calculator to calculate the gold price rate of your gold jewellery.

Why Indian jewellers are happy with the GST rate on gold

The first of two taxes that Indian travellers to the Middle East have to pay has been reduced dramatically. The Government of India has cut the import duty on gold from 10% to 2.5%. Most people who go shopping for gold opt for 22-carat, which attracts 10% import duty. This is prohibitive. How can anyone pay a 10% tax at the airport? It is enough to put off tourists and visitors. Now, they will be able to take back 5kg of gold free of duty.

By Darbaar

Anurag Rathod, as a blogger he used to spread all about app-based business, startup solution, on-demand business tips and ideas and so on.

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