Footwear, biodiesel to be assigned GST rates on June 3

Gold rate major bone of contention

Footwear, biodiesel to be assigned GST rates on June 3

Apart from gold, textile and beedi, GST Council on its June 3 meeting will set rates for footwear, agriculture implements and biodiesel.

Gold appears to be the major bone of contention. States like Kerala want to cap it at 5%, but Maharashtra, Gujarat and Tamil Nadu want it even lower.

While the Centre believes that too high a rate on gold could lead to smuggling, jewellery making hubs like Maharashtra and Gujarat are of the opinion that even at 5%, jewellery making could be costlier.

The government also believes that a lower rate will bring more people into the organised segment.

The total gold holdings with private households and individuals in India is around 22,500 tonne.

Currently, gold jewellery attracts an excise duty of 1%, without a central value-added tax or CENVAT credit. On refined gold bars, the government levies a 9.5% excise duty.

The council, which decided on tax rates for 1,211 goods and services in its Srinagar meeting, could not build a consensus on rates for gold as there happened to be wide ranging differences between states and even between the Centre and states. 

Footwear, as a part of the fashion industry, is hoping for GST to play a role in the ironing out of differences with apparel industry. Basic customs duty remains the same for both at 10%, countervailing duty (CVD) and excise duty at 0% to 4% for apparel and around 12.5% of maximum retail price for footwear.

Moreover, value added tax (VAT) for footwear averages at about 14% across the country, whereas for apparel, it is at about 5%.

Comments (+)