GJEPC Seeks GST Exemption On Export Transactions

Proposes 1.25% On Domestic Sales.

With the government aiming to roll out the Goods & Services Tax (GST) in the country by April 1, 2017, the Gem & Jewellery Export Promotion Council (GJEPC) has sought a tax exemption on export-related and intratrade transactions, and minimal tariffs on domestic sales.

Welcoming the government’s move towards GST, the GJEPC filed a representation on behalf of the entire gems and jewellery industry even as the GST Council commenced a crucial meeting to set rates. The GST Council is a joint forum of the centre and the states that will take decisions on important issues like tax rates, exemption list, threshold limits, etc.

Currently, gold, silver and precious metals face no central excise and most states tax these commodities at the rate of 1%. However, at the third meeting of the GST Council that was held in New Delhi on October 19, a 4% rate on gold was proposed.

Interestingly, a finance ministry report on the Revenue Neutral Rate and Structure of Rates for the GST released last December refers to gold, silver and precious metals as “strong demerit goods” that have become “a source of macroeconomic instability and less important as a savings vehicle”.

“Indeed, it is inconsistent for the government to actively promote schemes (gold bonds and gold monetization) to wean consumers away from gold, on the one hand, and also give highly concessional tax rates to buy gold, on the other. For all these reasons, these commodities should in principle be taxed at the standard rate: instead they are taxed at about 1-1.6% (centre plus states). This anomalous treatment must be rectified at least by raising current tax levels to 4% or 6%,” the report states.