Finance

What Will Be The Impact of GST on Gold and Jewellery in 2021?

GST on Gold
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Gold is considered to be one of the highly prioritized investments in India. If there is any change in the tax, it would have far-reaching economic consequences in India. It tends to affect the message section of the Indian population. The slabs of the goods and service tax applied on the variety of goods and services based on the various stages of gold in the economy. Some of these stages include industry, supply, manufacture, and many more.
 
Gold plays an important role in the economy of a country. For instance, if the gold value is nil before the GST, then it would be 3% after the GST. In case of making changes, it would be 5% after the GST. The price of a gold bar or pure gold comprises a variety of costs. These costs include the price of the extraction of the gold, processing, and most importantly, the margin of profit. All of these are somehow affected by the GST. The demand for gold did not affect the import of gold.
 
Moreover, the import duty remained the same. Hence even before the GST, it was 10%, and after the GST, it remained at 10%. As one can rightly say that the smuggling of gold decreased after the GST charges. The profit margin for gold in the Indian economy is a subjective concept. As for the gold jewelry, the making charges get added.

Amount Of Gold:

Moreover, in the case of today’s scenario, the end-user needs to be 3% of the GST amount on any gold-related jewelry or gold. Moreover, they need to pay 5% GST on the making charges. If the gold or the jewelry needs to be imported, you need to pay an additional 7.5% on the import duty. Thus, in the case of pure gold, the total amount that the end-user needs to pay is 10.5% as per the duty implications and the total GST on gold. In this case, the value-added tax under service tax gets applied to the price calculated before the GST regime.
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Various GST rates on gold jewelry:

The GST rate on gold jewelry happens to be 3%. If it involves any job work about diamonds with the help of polishing and cutting, then the rate of GST becomes 1.5 %. However, for any precious stone, the rate of GST becomes 0.25%. However, if one is dealing with reconstructed or unworked gold jewelry, then the rate of GST becomes 3%
 

GST exemptions:

At the GST council meetings, there were some announcements about examining the goods and service tax in the year 2019. It stated that there would be no charging of the GST for any supply of gold to exporters to export the gold jewelry. Moreover, the manufacturing of the gold needs to be placed by some notified agencies registered under the GST act. Hence this move reduced the exporter’s financial burden of gold in the Indian market. But in the case of the domestic buyers of the gold and gold jewelry, there would be no impact of GST, including the GST tax payment.
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Consumers who approach these goldsmiths on their own have to pay the 5% GST when they are not registered under the special GST act. The goods and service tax does not get levied on the unregistered individuals who sell gold jewelry.
 
Even when unregistered individuals exchange gold ornaments to buy new ones, one will not charge GST for those transactions. This rule came into action according to section 32 (5) of the cost rules. But the gold companies or the dealers need to satisfy the condition for the rule to work.

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