Gold jewellery manufacturers, who have been affected by subdued sales due to rising retail prices, have alleged that the government is likely to increase GST rates for the yellow metal from three percent to over 10 percent. CGST officials, however, state that they have received no information regarding the matter. Jewellers believe that the hike will be announced after the next GST council meeting that is set to be held on December 18.
They claim that although muted for a while, gold sales have slowly picked up. However, it seems that it is no time for them to heave a sigh of relief, as rumours about the tax hike has spread like wildfire. Coimbatore Gold Jewellery Manufacturers Welfare Association President B Muthu Venkatraman said, “The reasons for the steep price increase is due to two things a three percent GST rate and 12.5 percent import duty. Industrialists across the nation have been requesting the Centre to address this issue but to no avail.”
Claiming that the middle and lower-middle-class people are the most affected due to rising retail rates, he said that at present, a good day’s business sees them sell about 100 kg gold and make around Rs 35-40 crore a day. “Earlier, we used to sell 200 kg gold on a good day and do business worth Rs 70 crore,” he added. It is at this time that news about potential tax hike spread, Venkatraman said. “We have been requesting the Centre to reduce import duty levied on gold. The government, on the contrary, increased the duty by 2.5 percent to 12.5 percent. Now, we hear that the GST rates for gold will be hiked as well. The announcement is expected to come after the GST council meet set to happen on December 18,” said Venkatraman.
Sources from the Central GST office said, ‘’We do not know any information about the gold tax rate and whether it will be increased or not. Only the GST council has the authority to decide on the matter. To some extent, it is true that the increase of import duty for gold is a reason for smuggling activities to increase.’’