After a lot of debate on the issue of tax reform in the gold price, finally, a rate of 3 per cent tax was fixed. While some believe that the GST tax rate on gold and jewellery is slightly higher than the previous tax rate, some are happy that at least it is much lower than what was feared initially.
Prior of GST, jewellers used to pay 10 per cent customs duty on gold and 1 per cent excise plus 1.2 per cent VAT over and above that. All of these taxes when summed up equals to 12.43 per cent when buying jewellery and 11.32 per cent when buying bars as there is no excise duty on bars.
With the implementation of GST at 3 per cent for gold and 18 per cent for making charges, the effective rate comes to 15.67 per cent including 10 per cent customs duty.
When compared, the effective price increase on gold jewellery comes to 3.24 per cent and the gold bars will be dearer by 1.98 per cent. Thus, it is clear that gold is going to get a little expensive for consumers in India. But there is unlikely to be any negative impact of GST on gold price as the metal has been a favoured asset for Indians over several decades and will continue to do so.