Whether you are a licensed gold jeweller or want GST registration in Bangalore for Gold business, GST on Gold is important to understand. So, let’s check out:
What is GST on Gold?
Goods and Services Tax will be imposed on individuals buying gold Jewellery. Simply put, when you buy gold ornaments, you must pay GST on Jewellery and make charges. However, you do not have to pay GST if you sell your jewellery to pay for it.
Impact of GST on Gold
After the implementation of GST on Gold, the step significantly impacts Gold. Here is the GST impact on Gold you need to know:
- Increase in Price:
The cost of Gold has escalated by implications of a 5% tax on Gold jewellery-making charges. This has reduced the demand, thus increasing costs. The liquidity with investment in Gold has also seen a surge in cost.
- GST on Gold Jewellery:
GST on Gold Jewellery making charges is 5%. The GST on gold jewellery is typically in fixed charge or fixed %age of gold cost. Making charges will vary as per jewellers and their production.
- Improved Transparency:
The GST implementation on making charges and the entire GST System on Gold make it compulsory for dealers to make transactions more transparent with documentation. So, customers will get more accountability from dealers in the market.
- Other Factors:
In addition to GST on jewellery, there are factors like exchange rate, liquidity, reduced gold mining, and increased gold price that impact GST on Gold.
- Free Trade Agreement:
With the GST system on Gold, few benefits are offered, such as a free trade agreement, which means dealers can import Gold without customs duty. GST-registered importers can get Gold from countries like South Korea without a 5% customs duty.
GST on Gold Exemptions
After 31st December, the registered and licensed Jewellery exporters are exempted from GST when buying supplies of Gold. The move is made to enhance the gold export industry in India across the globe. So, the burden on Gold exporters is reduced. However, licensed jewellers have the option of availing a 2% ITC( input tax credit) on production expenses.
Impact of GST Implication on Gold: Before and After GST Comparison of Gold Price
The implications of GST on Gold have made it expensive over time. Despite various taxes, Gold was slightly less costly than after GST. To give you a better idea, here is an assumed before and after comparison:
| Category | Before GST(In Rs) | With GST(In Rs) |
|---|---|---|
| Cost | 1,00,000 | 1,00,000 |
| Custom Duty (10%) | 10,000 | 10,000 |
| Excise Duty(1%) | 1100 | – |
| VAT(1.2%) | 1333 | – |
| GST 3% | – | 3300 |
| Making Charges | 13200 | 13200 |
| GST on making charges(5%) | – | 6325 |
| Total | 125633 | 132825 |
Considerations Before Investing in Gold
When you are investing in Gold, there are a few things you need to consider, such as:
- Make sure you buy Gold from a registered seller or BIS-certified.
- The Gold must have a hallmark or be certified with authenticity.
- The GST on Gold can vary as per Karat and finesse. The low karat, i.e. 18 karat, is low-quality and has the lowest GST, while 24 karat is the highest.
- You need to understand that different metals or precious stones have different GST. So, make sure you check the bill for details before making payment.
- The cost of Gold will change and often change with varied factors. This change will have implications for the Gold GST rate.
Conclusion
GST implications on Gold Jewellery have a significant impact on the gold business. However, many benefits are provided for registered or licensed gold exports. After understanding Gold on GST, you need a business consulting firm if you need to opt for the registration process. Bizpole is one of the top companies helping businesses to register legally and avail of benefits provided by the government. Moreover, you can find quality and detailed information on the law and related data.
