GST Council To Explore Making E-Way Bills Must For Moving Gold Within States
A Group of Ministers has agreed that states can individually decide to make e-way bills mandatory for the movement of gold within their territory to check tax evasion.
The panel decided that if states want to implement the e-way bill mechanism for gold and precious stones, they can do so for intra-state movement of the commodity, Thomas Isaac, Kerala finance minister and head of the panel; and Bihar Deputy Chief Minister Sushil Modi, a member of group, told BloombergQuint.
Currently, inter-state movement of goods over Rs 50,000 requires an e-way bill but gold is exempt. Given tax evasion and smuggling of gold, the GST Council created a group of ministers to examine if implementing the e-way bill mechanism for gold and precious stones is feasible. GST on gold is levied at 3% while precious stones and diamonds are taxed at 0.25%-3% .
The legal changes required to make e-way bill generation compulsory for intra-state movement of gold, and a monetary threshold for gold will be worked out by the officials of Department of Revenue, Modi said. The proposal will then be taken to the GST Council for its final approval.
Isaac told BloombergQuint that a proper tax administration is needed for gold. States like Gujarat, known for gold and diamond industry, had reservations about data of transportation of gold and diamonds being revealed if e-way bill system is implemented as it tracks the transport of goods, he said.
The panel agreed to implement the system within a state and secrecy of movement of goods will be maintained, with only commissioner-level officials dealing with the information, Isaac said.
The panel was not in favour of making e-way bills mandatory for inter-state movement of gold as it’s “not feasible” and will complicate the system, Modi said.
E-way bill generation for inter-state movement of gold and precious stones may lead to security concerns as such consignments would be tracked, according to a government official.
Tax evasion in gold is rampant, and the government needs to come up with some framework to control it, Rajat Mohan, a partner at AMRG & Associates, told BloombergQuint. “Implementation of e-way bill system for intra-state movement of gold will help in restricting tax evasion as trade in the commodity mostly happens within a state.”
Besides, Isaac and Modi, the panel includes Gujarat Deputy Chief Minister Nitin Patel; Karnataka Home Minister Basvaraj Bommai; and Manpreet Singh Badal and Amit Mitra, finance ministers of Punjab and West Bengal.
The ministers have yet to submit their final recommendations to the GST Council, and will also explore if e-invoicing system—that’ll be implemented from Oct. 1—can be extended for gold, Modi said.
There’s a proposal to make e-invoicing and e-billing mandatory for jewellery shops, Isaac said. To check smuggling of gold, a reverse tax will be proposed on sale of the old yellow metal, he said. Currently, smuggled gold is sold as old gold, and a tax under the reverse-charge mechanism tax would mean the buyer will have to pay tax, for which he can claim credit, Isaac said. “This will help in keeping a check on smuggled gold that has doubled to about 2,000 kg in 2019-20.”
Source: Bloomberg-Quint
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