The GST Council meet held on Sunday in the Capital among other items also reduced the GST for jewellery making charges from the decided 18% to 5%. The step shall reduce the pressure on jewellery buyers while at the same time render pricing mechanism in the industry more transparent. The new tax rate shall be applicable with the roll out of July 1.
The industry representatives including the All India Gem and Jewellery Federation and IBJA (Indian Bullion and Jewellers Association all made the request for reduction in the indirect tax rate on jewellery making charges. The charges fall anyway in the range of 10-12% of the cost of gold which is very high and a high tax implication only adds to the burden of the jewellery buyer.
The decision has been welcomed by the industry tradesmen. Currently there is no tax implication on jewellery making charges and 1% each is applicable as VAT and excise. The higher tax slab rate of 18% as otherwise penciled would have increased the tax incidence for consumers by almost double.
The step is likely to boost transparency with less burden on the end consumer with lower tax rate penciled for gold @3%. The World Gold Council expects a significant demand uptrend by the year 2020.