The GST Council on Friday at its 15th meeting finalised tax rates that will apply to gold and other a few other items. Finance Minister Arun Jaitley, who chaired the meet, said gold and gold jewellery would attract a GST rate of 3 per cent.
Tax experts say that GST rate of 3 per cent rate on gold won’t be significantly different from the current tax regime on the yellow metal and this would be welcomed by the jewellers. Currently, gold is taxed around 2 per cent – 1 per cent excise and 1 per cent VAT (value-added tax). But some states charge a higher VAT.
Jaitley said at the GST Council meet that there was proposal to fix GST rate on gold between 2-5 per cent. Prashant Deshpande, partner at Deloitte Haskins & Sells LLP, said the fixation of GST rate on gold at 3 per cent won’t be much different from the current tax regime on gold.
The long-awaited GST is hailed as biggest tax overhaul since independence. It will replace a slew of central and state levies, transforming Asia’s third largest economy into a single market.
The GST Council today also approved the draft transition laws that will help switchover to the new tax regime. According to the new draft law decided today, once GST is implemented a company can claim credit of up to 40 per cent of their central GST dues for excise duty paid on stock held by businesses prior to the rollout. The GST Council had last month put over 1,200 goods and 500 services in the four tax brackets of 5, 12, 18 and 28 per cent.
The Goods and Services Tax (GST), set to be launched from July 1, will have rates of 5, 12, 18 and 28 per cent for services, in line with those applying to goods. It is a big departure from the current regime, where a single rate of 15 per cent is applied on most services.
Finance Minister Arun Jaitley has played down concerns that higher headline rates would inflate the tax burden on consumers. Since service providers will get tax input credits, he said, the effective tax rate will be lower.
Packaged food items and solar panels will be taxed at 5 per cent, while beedis will be taxed at 28 per cent and will not attract any cess, the finance minister stated.