GJF reacts to Economic Survey referring gold GST rate being 'low'

Economic Suvery Volume II 2016-17 stated that 3 per cent GST on gold is low and are disproportionately consumed by the ‘very rich’.

Post By : IJ News Service On 17 August 2017 3:59 PM

The Goods and Services Tax (GST) rate of 3 per cent on gold was low and needs to be increased as it is consumed by the "very rich", believes Chief Economic Advisor Arvind Subramanian, the author of the Economic Survey.

According to the Economic Suvery Volume II 2016-17, tabled in Parliament recently, “The tax on gold and jewellery products – items that are disproportionately consumed by the very rich – at 3 per cent is low.”

Reacting to the statement, Nitin Khandelwal, Chairman, GJF said, “We are surprised to see reports of a very contrary and shocking view by the Honourable CEA, author of The Economic Survey on GST rates for the gems and jewellery sector. It's NOT difficult to fathom the seriousness of learned views of various experts, tax departments, and senior members of the country over decades, that high rates of tax on any price sensitive sector will be detrimental to compliance. Further, the principles of GST is to keep rates similar, close to earlier existing VAT rates. GJF has time and again supported and welcomed the Government's decision of imposing 3 per cent GST on gold and has transitioned smoothly into a compliant GST era from July onwards.”

He further said, “Gold has a 5,000 year old legacy in India and is not luxury but essential to socio-economic framework of our country. Gold is used by rich and poor people for obvious reasons, and around 60 to 65 per cent of business is generated from rural segment. The handcrafted jewellery business generates the second highest employment in India. Even though GJF demanded 1.25 per cent GST on gold in line with the low tax rates in majority of States, the trade was convinced to accept 3 per cent GST and to express solidarity with the Government that was introducing biggest tax reform since Independence. Low tax rates on gold will lead to greater transparency and compliance amongst jewellers, and Government can collect more tax.”

“Honourable CEA, author of The Economic Survey is sending a contradictory, conflicting message within 45 days of the beginning of the GST era which will create confusion and a contradiction to Hon’ FM Arun Jaitley and all State FM's research. All policy makers should continue to support earlier decisions made by Government with regards to GST on gold arrived through consensus and help industry stakeholders to mature, get more organised and successfully transition into GST regime. So the observations by the CEA are not aligned to the macro Government policy and broad principles of thinking,” he concluded.

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