The GST Council is expected to shortly announce the rate of tax to be levied on gold under the proposed GST (Goods and Services Tax) regime to be implemented from July 1 — less than a month from now. The other five items on which the tax rate is being discussed at today’s meeting of the GST Council, chaired by Finance Minister Jaitley, are bidis, textiles, footwear, biscuits and packaged foods, and bio-diesel and agriculture implements.
Earlier last month, the GST Council, tasked with tasked with framing rules for implementation of most sweeping tax reform India has ever seen since independence, finalised the rate of tax on over 1,200 items and most of the services, while deferring decision on six items to today’s meeting.
The council has proposed four tax slabs at 5%, 12%, 18% and 28% under GST, while exempting essential or daily consumption items and services from tax levy, such as fresh meat, fish, chicken, eggs, milk, curd, natural honey, fresh fruits, vegetables, flour and bread, and healthcare and education services. Other than this, it levied cess over and above the 28% tax on certain luxury goods and sin goods. The GST Council kept 81% of the items in the first three tax brackets, ie, up to 18%. The 12% and 18% tax bracket together account for two-thirds of all items.
Yesterday, price of gold fell in the bullion markets with where the dealers were reportedly selling the precious metal at a discount to the official prices, over concerns of the higher tax levy on it under GST. The lowest tax slab of 5% under GST is far higher than the current tax incidence of about 2% on gold.
GST seeks to unify the entire country into a single market with a single value-added tax levy on all the goods and services across states at the point of consumption, subsuming into itself multiple taxes that are levied at present. This is expected to make the movement goods across the state borders smoother, faster and easier, though some experts have raised concerns over the complications that could arise out of a multiple tax-slab structure.