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What is Impact of GST on Gold?

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GST is popularly known as the Goods and Services Tax. It is charged w.e.f 1st July 2017. GST has replaced Value Added Tax (VAT), Customs Duty, Central Excise Duty and various other taxes. Gold price today is affected by GST. This article will help you understand the effect of GST on gold.

Gold Rate and GST

The gold price today after the introduction of Goods and Services Tax has witnessed some fluctuations. Gold analysts were a little apprehensive that GST would trigger a decline in the gold demand due to the high taxes. The applicable Goods and Services Tax for gold was decided by 3 percent, with an add-on 8 percent tax levied on the making charges. The GST on the making charges was reduced to 5 percent because of various concerns raised by different groups.
Presently, gold rates are increasing due to forever changing market trends along with the add-on tax burden. The overall gold rate has increased because of the high import duty related with the gold. The high import duty is retained. It results in gold being levied a 10 percent an import duty along with 3 percent GST and 5 percent GST on that making charges.
The gold price after Goods and Services Tax has been increasing because of higher demand for gold across the globe. The plunging American dollar has triggered the higher trade of the metal, which has increased its value.
The long-term effect of GST on the gold prices in India seems to be positive. Initially, the fear of increased smuggling of the yellow metal because of its high demand was there. It seems that it will pass. For the time being, the jewelry industry is content with the gold price post-GST. However, the consumers have their own fair share of complaints regarding the increased prices.

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GST and Gold Buying

The tax brackets were announced on 3rd June 2017. The gold would be taxed at 3 percent. In simple words, the gold and gold-related ornaments would be taxed at a rate of 3 percent that has to would be borne by the consumer.

GST and Gold making charges

The government has levied a 5 percent of tax on the making charges. Currently, there isn’t any tax levied on the making charges. It accounts approx 12 percent of the actual gold price.
Initially, tax on the making charges was set at 18 percent. Appeals from the Indian jewelry association and councils to decrease the rate made the government change its mind and fix it at the current rate of 5 percent.
A high tax on the making charges will increase the load on the consumers, as the additional cost would be borne by them.
Jewelry associations and councils have applauded the change in the tax structure. They are sure that it will help to enhance transparency in the manufacturing market of gold and gold-related jewelry.

We hope this article helped you to understand the impact of GST on gold.

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