GST may make gold costlier

KOLKATA: Gold may become costlier for Indians if the government accepts chief economic advisor Arvind Subramanian’s suggestion to put the yellow metal in the 12% tax bracket under GST.

With an import duty of 10%, tax on gold may turn out to be 22%, which will reduce its consumption in the physical form in the second largest gold consuming nation in the world.

At present, gold attracts an import duty of 10%. In addition, there is a VAT of 1% and an excise duty of 1%.“For a healthy development of trade, GST and import duty combined should not cross 12%; ideally, it should be in the range of 1012 %,” Shekhar Bhandari, business head for global transaction (banking and precious metals), Kotak Mahindra Bank, told ET.

Late last year, there was agreement on five broad GST slabs -0 (the exempted category), 5%, 12%, 18%, and 28%. While retailers and jewellers want the government to peg GST at 1.25%, keeping the customs duty intact at 10%, manufacturers and bullion dealers want a 6% GST and an import duty of 6%. Surendra Mehta, national secretary, India Bullion & Jewellers Association, reckons that import duty should be at 6% and GST should be 6%.

“If the tax incidence remains high, then there’s a propensity among people to evade tax. And that results in entry of gold through the illegal route which no government would like. Smuggled gold affects trade too,” Mehta explained.

Gold demand in the country fell 21.2% last year from the year before to 675.5 tonnes, according to a World Gold Council (WGC) report.


GST council clears CGST and IGST laws

Arun Jaitley expresses hope that GST’s implementation from 1 July will be possible after the council approves the drafts of CGST and IGST laws

New Delhi: Moving a step closer towards implementing the goods and services tax (GST) from 1 July, the GST council on Saturday approved two crucial supporting legislations for this ambitious tax reform.

The GST council, in its eleventh meeting in New Delhi, approved the drafts of the central GST law (CGST) and the integrated GST (IGST) law. It will again meet on 16 March to clear the state GST law (SGST) and the union territory GST law (UTGST).

Once all the bills are passed by the council, the Union government will collectively take the bills to the Union cabinet for its approval. Subsequently, the bills will be tabled together in Parliament in the second half of the budget session.

To be sure, there are some minor changes that have been proposed in the drafts of the CGST and the IGST bills. The legal committee will make these changes and subsequently the drafts will be again circulated to the states in the next few days. The bills may then again come back to the council for its final nod.

In a press conference after the meeting, finance minister Arun Jaitley expressed hope that the implementation of GST from 1 July will be possible.

“Hopefully the laws will be in Parliament in this session. Once the GST council completes this round of legislative activity, then the work will start on fitment of goods and services into the various rate structures,” he said.

The IGST law, the CGST law, the UTGST law and the bill to compensate states for revenue losses arising from a transition to GST will require the approval of Parliament while the SGST law will require the nod of the state legislative assemblies.

West Bengal finance minister Amit Mitra said the demands of the states for sharing of administrative powers under the IGST act have been met. “The cross empowerment will not be done by notification, will be put in as part of IGST law. I am very happy since it was a demand of states,” he said.

Pratik Jain, indirect tax leader at PwC India said approval of CGST and IGST laws by the GST council is a decisive step towards implementation of GST from July 1 this year.