The price of gold following the adoption of the Goods and Services Tax (GST) regime has seen some fluctuations. Analysts were apprehensive that the tax would lead to a decline in demand for gold due to the high incidence of taxation. The GST on gold was fixed at 3%, with an additional 8% tax levied on making charges. The tax on the making charge was then reduced to 5% due to concerns raised by various groups.
GST on Gold Purchase
The tax slabs were announced on June 3rd, 2017 and gold will be taxed at a rate of 3%. In other words, all gold and gold-related jewelry would be taxed at a flat rate of 3%, which would be borne by the end consumer.
GST on Gold Making
In addition to this, the government has also levied a 5% tax on making charges. At present, there is no tax on making charges, which account for close to 12% of the actual cost of the gold.
The tax on making charges was initially fixed at 18%, but appeals from Indian jewelry councils and bodies to reduce the rate resulted in the government fixing it at the present 5%.