Here Is What ICRA Has To Say About Three Percent GST Rate of Gold

The 3 percent tax on gold jewellery is not likely to cause any major disruption to the overall gold demand, ICRA said in a report.

“Gold jewellery demand is expected to be favourable over the near-term with an uptick in both the rural and urban demand. Rural consumption will benefit from favourable monsoon guidance, which will likely cause a rise in minimum support prices, rural employment guarantee scheme and farm loans waiver in few states,” ICRA Vice President and Co-Head, Corporate Ratings, K Srikumar said.

He said that the urban demand will gain traction from rising income levels, pay revision for state government employees and pensioners and favourable demographic spread.

The government announced a 3 percent tax on gold jewellery, in line with the 2-6 percent rates indicated earlier in the draft Goods and Services Tax (GST) rules.

Under the present tax regime, jewellery retailers have levied a VAT of 1 percent in most states (except in Kerala, where 5 percent Value Added Tax (VAT) is levied) on sales and an excise duty of 1 per cent is levied on the input side.

Post-demonetisation and regulatory restrictions, ICRA said there was churn in the market share of unorganised retailers who were affected by liquidity squeeze and higher compliance costs

Share This!
Show Buttons
Hide Buttons