GST or Goods and Services Tax came into effect across India on July 1, 2017. A number of goods and services have become cheaper since then. However, certain grey areas in the landmark reform remain. For instance, alcohol curiously does not come under GST. Many waited for residential property rates to come down, but so is yet to happen. One such grey area for many folks is the GST’s impact on gold. After all, us folks in India love the previous metal for a number of reasons. It can be used as a gifting item or as an investment for liquidation later. With such uses in mind, here’s all you need know about the implications of GST on gold.
GST On Gold – All You Need To Know
Under GST, there is 3 per cent tax on gold with any additional work drawing 5 per cent tax with it. Moreover, if you are exchanging old gold for new, the GST you will have to pay on the new purchase will be adjusted against the sale of old gold. Simply put, if you go to a jeweller to buy new gold in exchange of old gold, the GST charged by the jeweller will be adjusted towards your purchase of new gold.
#2: Tax on Making of Jewellery
If your gold jewellery is modified in any way, it will attract a GST rate of 5 per cent. This bit applies on the making of both old and new gold jewellery. Also, if you give it for polishing or remaking, the same 5 per cent tax will be applicable on all applicable charges.
Also Read: GST on Under-Construction Property
As far as reselling old gold is concerned, it will not attract any tax, only if you buy new gold with the said money. What this means is that you need to buy gold in exchange of gold to avoid taxes. Earlier provisions stated that 3 per cent tax will be charged on the sale of old gold, even if one was exchanging it for new gold.
Avoiding taxes is not as easy, in case of buying gold, as it seems. If you are buying gold from an unregistered supplier, you will be paying taxes on the same under reverse charge mechanism. Provisions for the same have been put in place to ensure illegal trading gold can be prevented.
So, this is all you need to know about GST on gold. Do feel free to mention your thoughts in the comments below. We may even include your suggestions on this topic here. For more such stories, stay tuned to FinGyan.