GST GOLD JEWELLERY Archives

Expensive cars, jewellery to become cheaper as TCS to be out of GST working

March 12, 2019 admin Comments 0 Comment

In a relief to buyers of high-value cars and jewellery, the CBIC has said that the TCS amount would be excluded from the value of goods for computing GST liability.

Under the Income Tax Act, tax collection at source (TCS) is levied at 1 per cent on purchase of motor vehicles above Rs 10 lakh, jewellery exceeding Rs 5 lakh and bullion over Rs 2 lakh. TCS is also levied on other purchases at different rates.

The Central Board of Indirect Taxes and Customs (CBIC) in a circular said that the TCS amount would be excluded from the value of goods while computing the Goods and Services Tax (GST) liability.

Earlier in December, the CBIC had said that the TCS amount would also be included while ascertaining the GST liability on goods on which TCS is applicable under the I-T Act.

In view of the representations received from various stakeholders and after consultation with the Central Board of Direct Taxes (CBDT), the CBIC has decided to exclude the TCS amount paid while valuing the goods for the purpose to levy GST.

The CBDT has clarified that TCS is not a tax on goods but an interim levy on the possible “income” arising from the sale of goods by the buyer and to be adjusted against the final income-tax liability.

“For the purpose of determination of value of supply under GST, Tax collected at source (TCS) under the provisions of the Income Tax Act, 1961 would not be includible as it is an interim levy not having the character of tax,” the CBIC said.

EY India Tax Partner Abhishek Jain said: “This clarification comes as quite a relief for businesses specifically the automotive sector. While most industry players already believed that GST should not be levied on the Income tax TCS component, given the otherwise clarification by the Government, they were quite apprehensive of litigation on this aspect”.

AMRG & Associates Partner Rajat Mohan said the erstwhile circular issued by the CBIC unnecessary complicated the mechanism of calculating GST where TCS Income tax was also collected by the supplier.

“Recent corrigendum of CBIC eased the calculation process by breaking the circular referencing which would also result in marginally rationalising the tax payments (GST and income tax both),” Mohan said.

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Source: Business-Standard.

Jewellers seek removal of GST on exhibition items

December 17, 2018 admin Comments 0 Comment

The gems and jewellery industry is not only facing headwinds for exports but also feeling the heat of the tax burden. While the exporters have long been demanding to remove the 3% GST on unsold products brought back after participating in overseas exhibitions, the 3% GST coloured stones for using jewelry in the domestic market has been an irritant for the manufacturers.

“There is no logic on levying 3% GST on unsold products back to the country. Jewellers participating in overseas exhibitions cannot sell all their products. Some of the items come back. While the government rule says when the products are sold, the exporters will get back the products, lot of money is locked up in the system adding to the working capital woes of the exporters,” said Rajiv Jain secretary of JJS, which will be held this year from December 21 to 24.

Similarly, for the domestic use diamonds are taxed at 0.25% while coloured stones attract 3% GST. The anomaly has been there which needs to be corrected. “Since most of the coloured stone business is concentrated in Rajasthan, it has not attracted the attention of the GST council. We have drawn the attention of the government to this anomaly but are still awaiting for the rationalization,” added Jain.

Gems and jewellery exports during April-November have declined by 7% and the domestic market demand is yet to pick up. But organizers of the annual Jaipur Jewellery Show (JJS) said that the event still remains a crowd-puller.

Vimal Chand Surana, chairman of JJS, said that over 500 top retailers of India will be participating in the in the show, which has ‘Reflection of Royalty and Creativity’ as its theme this year.

This is most apt keeping in mind that Pink City is the land of royalty and gems and jewellery is a significant element of the same. JJS serves as a platform to guide traders and policy makers as well as inspire scope for creativity. Media coordinator of JJS Ajay Kala said the show already has around 30,000 online registrations with 28,000 repeat registrations and 2,000 new registrations. The show will have 825 booths this year pread over 2 lakhs sq ft area, added Kala.

“The number of repeat exhibitors at the show continues to grow every year. This year too, the show will feature different sections for costume jewellery, silvery jewellery and artefacts, gold jewellery, institutions, allied machinery, etc,” added Kala.

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Source: Times of India

Gold jewellers in a fix as confusion over GST levy continues

April 21, 2017 admin Comments 0 Comment

As the rollout deadline nears for a national goods and services tax (GST), there is ambiguity on its applicability to gold jewellery.

A section of jewellers considers making charges as a service charge and shows this separately while billing. If a service, the applicable rate would be 18 per cent, by the draft GST guidelines.

Another section of jewellers, however, adds making charges in value of the jewellery; they do not show it separately but add it to the price of gold. In this case, the applicable rate under GST would be two per cent (assumed, as the government is yet to formally state the rate for jewellery) on the cumulative value of the precious ornaments, if the government continues with the uniform rate on gold and jewellery.

“By the international standard, bills must be made showing making charges separately. We have urged the government to levy the same rate on gold and jewellery (including on making charges) under GST,” said Surendra Mehta, secretary, India Bullion and Jewellers Association.

In the base case scenario, considering gold at Rs 30,000 for 10 gm and a making charge of Rs 4,000, a consumer needs to pay Rs 34,000 for 10g of jewellery. If a two per cent GST is applicable on the entire value of gold, the payable duty would be Rs 680 for the jewellery. If the two per cent GST is made applicable on gold (Rs 30,000 per 10gm) and an 18 per cent GST on making charges, the total duty component would be Rs 1,320 per 10 gm (Rs 600 on gold and Rs 720 on making charge). Thus, a consumer would have to pay Rs 640 extra if the making charge is separated from the value of gold.

“In case the government seeks recovery of Rs 640 per 10g, calculated by charging 18 per cent on making charges after a certain period, jewellers would face a big burden of Rs 5,200 crore,” said a senior industry official.

Currently, two applicable levies are charged from customers in two ways — a value added tax of 1.2 per cent in most states, barring Kerala (five per cent) and excise duty of one per cent. Some add the applicable making charge of 10-20 per cent in the value of gold.

Source : Business Standard