The government can increase the GST rate on gold and silver from the current 3 percent to 5 percent. Earlier, the government had reduced the basic customs duty in the budget. The government has reduced the basic customs duty on gold bars from 15 percent to 6 percent. Also, the Agri Infra and Development Cess (AIDC) on the duty has been reduced from 5 percent to 1 percent. At present, 3 percent GST is levied on gold. In such a situation, the total tax on gold is 9 percent, which was earlier 18.5 percent. Similarly, the effective tax rate on silver has also come down to 9 percent.
GST may increase
According to industry experts, reduction in customs duty can be a big indication of increase in GST rates. Finance Minister Nirmala Sitharaman had mentioned simplifying and rationalizing GST rates in the budget. GST rates are likely to increase from 3 percent to 5 percent. Ajay Kedia, director of Kedia Commodities, says that the government is likely to increase the GST rate on gold and silver to 5 percent. While reduction in customs duty will stop gold smuggling. This step will increase the government’s revenue.
State governments will earn more
The increase in GST rates is good news for state governments as the increased rates will provide them with more tax revenue than their share in central tax revenue. Also, cess and surcharge revenue is not shared with state governments. Somasundaram PR, former regional CEO of India, World Gold Council, said that since state governments get a higher share of tax revenue, they may be more inclined to take action against smuggling.
what happened to the prices
The price of gold on the country’s futures market Multi Commodity Exchange has increased by more than Rs 900 from the lower level of the budget day. The special thing is that on Friday the price of gold also reached close to Rs 71 thousand. On Thursday, for the first time after July 23, gold reached the level of Rs 70 thousand. According to MCX data, on Friday gold closed at Rs 69,954 per ten grams with a fall of Rs 165. However, during the trading session, gold also reached Rs 70,965 per ten grams.
On the other hand, if we talk about silver, the price fell by Rs 101 per kg on Friday. However, there has been no significant recovery in the price of silver since July 23. Even now the price of silver is Rs 6,522 less than the high of July 23. However, on Friday the price fell to Rs 83,702. Which had come down to the lower level of Rs 81,506.
