India is all set to tax precious metals such as gold, silver at 3% rate under a new sales tax ie. GST (Goods and Services Tax) that is expected to come into effect on July 1, 2017. The Goods and Services Tax (GST) Council recently cleared the pending decision in the context of imposing GST rates on gold, and the council reiterated its decision on imposing GST tax rate of 3% on gold, silver, and processed diamonds.
The GST on gold is reported to have been lower than industry expectations of around 5% and is expected to replace some federal and state levies. Finance Minister of India, Arun Jaitley reiterated that after keeping various factors in mind they had reached a consensus of taxing gold at 3%. Revenue Secretary, Hasmukh Adhia said that gold jewellery, silver, and processed diamonds would be taxed at 3%, and rough diamonds would be taxed at 0.25%.
The gems and jewellery industry have welcomed the tax rate. The industry stated that this would facilitate the sector in becoming more compliant and mature. The India head of the World Gold Council reiterated that this tax decision would facilitate stabilising an industry in which millions are employed. It is said that Prime Minister Narendra Modi’s government is expecting GST to boost economic growth which is featured with a slump at 6.1% in the quarter to March.
Somasundaram PR, Managing Director, India, World Gold Council said that the customs duty of 10% on the total tax on gold was still high and would continue to impact the jewellery industry. He added that this is the right time for the government to cut the import duty and also to bring down the total tax on gold and help the industry to embrace the GST spirit.