Updated: Oct 29, 2018
A) GST on Gold & Jewellery
In Earlier tax laws i.e VAT and Service tax, the tax on gold was 2% (1% service tax and 1% VAT). GST has hiked the tax rate of gold to 3%.
With the implementation of GST gold prices rises to a 2-month high due to levy of 3% GST. Although, physical demand for gold has been lower because of the 3% GST that is levied upon 10% of import duty.
At present, gold prices are seeing a rise due to unstable markets in spite of the additional tax burden. While the overall price of gold has risen, this has been due to the import duty associated with the meta. As a result, gold continues to attract an import duty of 10%, in addition to the 3% GST and 5% making charges GST.
Impact of GST on the organised gold sector
It is believed that the implementation of GST will have dramatic affects on gold trade as only nearly 30% of the gold is sold through organised manner. Although GST is set to benefit the organised gold trade, as by having greater transparency and accountability, it may also prompt some jewellers to move to unorganised areas. This might happen by buying cheaper smuggled gold and selling without bills.
Rate of GST for gold making charges - 5% :- Yes, gold now has a making charge of 5%. GST council had earlier decided 18% for gold making charges, however, when GST was implemented, they decided to keep it at 5%
The rise in the rate of gold can due to the import duty which has been retained. Currently, gold attracts an import duty of 10%, in addition to 3% GST, and 5% making charges (GST).
B) No GST On Sale Of Old Gold Jewellery:
Gold sold by individuals will not attract GST, which will provide relief to consumers who exchange jewellery. According to the clarification by the Finance Ministry, selling old jewellery to a jeweller will not attract GST since the gold does not qualify as supply.
C) What is Making charges?
Making charges vary depending on the type of gold jewellery you are buying. This is because every ornament requires different style of cutting and finishing. Making charges are termed differently by each jeweller. Some jewellers call it 'making charges' and others may term it as 'wastage'.
Making charges can be quoted in two ways - either as a percentage of the gold value or as a flat making charge per gram of gold.