Skip to main content

3% GST on Gold to Hit Unorganised Sector: Industry

By

The GST Council's decision to impose a 3% GST on gold will not only make jewellery costlier but also lead to a higher incidence of illegal gold trade, industry experts have said.They also said bringing the unorganised gold sector into the GST ambit will be a challenge.

“With GST, the total duty has become very high and the customs duty maybe revisited,“ said Ajay Sahai, director general at Federation of Indian Export Organisations.“The duty could be one of the highest among major gold consuming countries, which could lead to high incidence of smuggling."

India, China and West Asia are the world's leading gold jewellery markets.On Friday, the GST Council also fixed a GST rate of 3% on silver, gold jewellery and processed diamonds, which is higher than the industry estimate.

With an existing 10% import duty, consumers will have to pay an effective duty of 13% on gold jewellery, up from the earlier 12.5%, which comprised 10% import duty, 1% value-added tax, 1% excise duty and 0.5% cess. India exported gems and jewelle ry worth Rs 2.89 lakh crore in 201617, up 12.32% from the previous year.

“It is a positive compromise because there was a lot of hype created that gold rate could be much higher,“ said Sanjeev Agarwal, CEO, Gitanjali Export Corporation.

“However, the challenge is at the manufacturing end because 90% of gold jewellery making is in the unorganised MSME sector. Getting this 90% base in the GST structure is a challenge,“ added Agarwal, who is also the chairman of Ficci's gems & jewellery committee.

On the retail front, almost 30% of the jewellery sector is organised.Calling the GST Council's decision to impose a 0.25% GST on rough diamonds a retrograde step, the Gems & Jewellery Export Promotion Council (GJEPC) said it will re-evaluate the viability of conducting the cutting and polishing activity in India due the thin margins in the segment.

“For a segment where 95% of the output is exported and whose global footprint is under constant stress from other competitive economies,an upfront levy of GST on rough imports, which was hitherto exempted, would invariably cause a major setback to the trade and impact India's significance in the global markets,“ said Praveen shankar Pandya, chairman at GJEPC.

Another concern flagged by the jewellery sector is that material costs comprise 80-85% of the ornaments and makers will get input credit only on the labour charges.

The Economic Times New Delhi, 05th June 2017

Comments

Post a Comment

Popular posts from this blog

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

By
  New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...
Post a Comment
Read more