Sat. Jun 25th, 2022
GST-on-gold

Goods and Service Tax (GST) is a comprehensive tax which is levied on consumption, manufacture and sale of goods and services. GST is a tax on goods and services with value addition on each stage. GST includes many state and central level indirect taxes. It overcomes the drawbacks of the present tax system.

Talking about the GST on Gold is subjected to a 3% GST tax imposed by the government. The goods and services tax, on the other end, is determined by the type of gold, imports, and the sector: unorganized or organized. GST is imposed not just on the acquisition of real gold, but also on the purchase of digital gold. So, whether you’re buying digital gold, you’ll have to pay GST at a rate of 3% on top of everything because the digital gold supplier purchases physical gold in your name equal to the amount invested. The London Bullion Market Association is in charge of gold fixing. The rates are established in US dollars every day at 10:30 a.m. GMT and 3 p.m. GMT.

Before the GST was implemented in India

Prior to the implementation of the GST in India, a potential buyer of gold/gold jewellery had to pay 1.2% VAT, 1% excise charge, and 10% customs duty while purchasing gold. The GST council has fixed a rate of 3% GST on gold, having replaced the Value Added Tax (VAT) and Excise Duty with a 3% GST. Nevertheless, due to the imposition of a 3% GST and a 10% customs charge, physical demand for gold items has dropped. In summary, gold has become 0.75 % more expensive since the imposition of GST.

Impact of GST on gold value:

The Goods and Services Tax (GST) has driven up gold costs for final customers. It’s because gold was formerly subjected to a 2% tax (1%- service tax and 1% VAT). The GST tax payment slab rate on gold value, on the other hand, is 3%. The main notion behind GST was to consolidate several indirect taxes into a single tax system, lowering the number of compliance requirements that each business had to meet. As a result of the development of GST on gold, gold-related enterprises were required to follow the new criteria. The overall impact of GST on gold may be seen in the final price, which increased by at least 0.75%.

GST on Gold

GST was designed to integrate various indirect taxes into a single tax system, lowering the number of compliance obligations that each business had to meet. Gold-related companies were forced to follow the new criteria as a result of the creation of GST on gold. The final price of gold increased by roughly 0.75%, indicating the overall impact of GST on gold.

How is GST calculated on Gold in India?

Gold is currently subject to a 3% Goods and Services Tax (CGST = 1.5%; SGST = 1.5%). The ultimate worth of gold jewellery, including the making charges, is subject to a 3% GST rate.

Effects of GST on gold in 2022

1- Imports of gold are affected by the GST,

The illegal smuggling of gold imports has significantly increased since the implementation of GST on gold, especially from the Middle East. This is due to the imposition of a 10% custom charge on gold imports, which is combined with a 3% GST, effectively raising the customs duty on gold imports.

2- The impact of the Goods and Services Tax (GST) on the price of gold,

The final consumer price of gold has risen due to the GST. It is because gold was previously subjected to a 2% tax (1%tax and 1%-VAT). In India, nevertheless, the GST tax slab rate for gold value is 3%.

The organized gold industry in India presently accounts for 30% of the market, but it is anticipated that high gold prices will drive sellers to the illegal gold sector, where they will illegally import gold.

INTAKE BEFORE GST  AFTER GST
1- Gold value making charges NIL 5 %
2- Gold value GST rate NIL 3 %
3- Gold value added tax 1% NIL
4- Gold value sales tax 1 % NIL
5- Gold value import duty 10% 10%

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