INDIA June 07 2017 9:11 PM
MUMBAI (Scrap Register): Metals Focus said that the 3% goods and service tax (GST) on gold, announced over the weekend, should be helpful for gold in the long term since it was not as high as some feared.
The GST was passed in August 2016. Since, the GST Council has met 15 times to set tax rates for various commodities, the consultancy explains. During a weekend meeting, gold-market participants watched to see what the council would decide for precious metals and jewelry.
The GST on precious metals was one of the last items to be finalized, reflecting a lack of consensus among council members over the past several months, Metals Focus added.
Consuming states wanted a higher GST rate, whereas the manufacturing states called for a lower rate. After intense lobbying, the council announced a 3% GST on precious metals and jewelry.
“This announcement is significant, as there was a growing fear among the industry that the council might announce a GST of 5% or higher, especially as a section of the government wanted a higher rate,” Metals Focus noted.
“Prior to this decision, the council had already approved tax bands of 0%, 5%, 12%, 18% and 28% for goods and services. As such, the 3% band for precious metals appears to be a special rate which highlights the importance of the industry to the government. We believe that this rate will help the industry over the long term,” Metals Focus added.