GST or Goods and Service Tax is an Indirect Tax that was introduced in 2017 to replace the number of different taxes that were earlier levied in different states. This was done so that a single tax structure is followed throughout the entire country.
Doing so has led to a number of benefits, a few of which are as follows -
Easy Online Procedure
The entire process of GST ranging from the registration to filing returns has been made online and is extremely simple. This has proved to be highly beneficial for start-ups as they do not have to spend a lot of time or resources in getting registered from various kinds of taxes such as VAT, service taxes, or excise.
Before GST, different taxes such as VAT and service tax had their own unique returns and compliance. Major advantages of the introduction of the GST, this has since changed as there is just one tax whose details need to be filed. As a consequence, the number of returns to be filled has also come down significantly.
Improved Logistics Efficiency
The logistics industry in India earlier had to maintain a warehouse in every state to avoid the different taxes which were applicable in every state. This is because every state had a different tax structure. This meant that every time any good moved across multiple states the taxes applicable in every state had to be paid. This was not only time consuming but also raised the prices of almost every commodity.
However, with the introduction of GST, this has been done away with as it has the same rate across the entire country.
GST Effect on Gold
The impact of GST on gold is double fold. It incurs a 3% tax on gold as a commodity and an additional 5% service tax rate as a part of its making charge. GST, therefore, is applicable to both supplies as well as service in case of gold.
Also, there are certain other ways in which GST affects gold jewelry, and you need to keep those in mind before purchasing.
Ways in which it creates an Impact on Gold:
You know that gold is mostly imported and GST applies to interstate importations. The IGST (interstate GST) is 3% while for the international imports, there is no GST. So, if a business imports gold from outside the country, then they are subjected to pay a 10% customs duty on gold imported in semi-finished form.
Recent Developments on GST for Exemption on Gold:
- In case a notified agency supplies the gold to a registered exporter, then as per the 31st council meeting on GST, there lies a clause of exemption.
- This saves the Indian exporters of gold jewelry from the GST burden.
- Domestic buyers, however, shall remain unaffected by this latest exception.
- Before the implementation of GST on gold, the tax charged was 1% VAT plus 1% service tax which summed up to 2%.
- Today, as stated before, the tax rate is 3% +5% of gross GST.
- The price of gold fluctuates regularly and depends upon a variety of factors that may change the total amount during your time of purchase.