Gold, silver under new tax slab of 3%

Govt confident of July 1 GST rollout

Gold, silver under new tax slab of 3%

Gold and silver will be taxed at 3% under the Goods and Services Tax regime, Finance Ministry Arun Jaitley announced after a meeting of the GST Council on Saturday.

The GST Council also decided to tax footwear below Rs 500 at 5% and biscuits at 18% under the GST, which will be rolled out from July 1.

Jaitley said footwear costing above Rs 500 will attract an 18% levy. At present, footwear priced from Rs 500-Rs 1,000 attracts 23% tax, including excise duty, and VAT levied by states. 

Jaitley announced that all natural fibres, including cotton and cotton yarn, fabrics and readymade garments valued below Rs 1,000 have been classified under 5% GST rate, garments valued above Rs 1,000 under 12%, synthetic or man-made fibres and synthetic yarn under 18%, while the fabric, irrespective of fibre, has been classified under 5% GST rate. The 5% GST on readymade garments below Rs 1,000 would benefit the public, being a mass consumption item, Jaitley said.

Packaged food items sold under a registered trademark will be taxed at 5%. The GST rate on agricultural machinery for all categories was also fixed at 5 %.

While beedis will be taxed at 28% and will not attract any cess, tendu leaves will be taxed at 18%. The GST on cigarettes is likely to be decided at the next council meeting on June 11. Solar panels will be taxed at 5% under GST.

Addressing the press, Jaitley said a nominal rate of 0.25% would be imposed on a rough diamond. He said the rate for gold was fixed after intense discussion and a consensus was reached fixing the rate at 3%, which is lower than the lowest slab of 5% under the new regime that will be implemented from July 1. The new rate for gold is closer to the current tax incidence of around 2 % -1 % excise and 1% VAT. But some states charge a higher VAT, leading to even 5 % tax. “There was an extensive debate on gold, and fixing the rate between 2% and 5%. But there was almost a vertical division. A consensus has been finally reached at 3%,” he said.

Officials said the GST Council took into account the concern of several states, particularly from the south, and market experts who had warned that a higher tax rate on gold will increase smuggling, with most traders choosing to evade taxation altogether. There is already a high proportion of cash transactions on the metal. Jewellers had wanted the levy on the precious metal at close to a concessional rate of 1%.

Jaitley declared that the Central government was “confident of sticking to the target date of July 1”. “All states have agreed on the rollout of GST from that date,” Jaitley said. West Bengal Chief Minister Mamata Banerjee had earlier said her state would not rollout the new indirect tax regime in its present form.
DH News Service

 

Commodities       Present rate of tax                      GST
Gold                  1% excise duty & 1% VAT             3%
Biscuits        6% excise duty on products cost-       18%
                  ing below Rs 100 & 14.5% VAT
Readymade     5.5% VAT    12% & yarn
garments         & fabric cotton 5%
Footwear         Up to Rs 500 exempted              5% on products
                      Above Rs 500 14.5% VAT            upto Rs 500
                      18% on products
                             above Rs 500
Jute                          2% VAT                        Exempted
Beedi                          Exempted                   28%
(Source: FKCCI)

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