Proposal for GST under reverse mechanism draws mixed response from jewelry sector
- | Divita S Gupta
In a bid to help plug loopholes in the misuse of ITC and GST collections, Government ministers have suggested an amendment under GST law. Ministers have recommended a GST of 3% be applicable on the purchase of old jewelry due to a reverse charge mechanism. Ministers are also suggesting the implementation of e-way bills for interstate transportation of gold. This proposal has elicited a mixed response from trade bodies in the gem and jewelry sector. UT Zaveri said purchase of old jewelry could potentially help curb tax evasion. The Indian Bullion and Jewelers association stated that such a move will make passing off of smuggled gold as old gold a lot difficult.
However, PN Gadgil and Sons is of the opinion that such a proposal could result in advancement of tax. If a jeweller purchases old gold, melts it and resells the same, a GST of 3% is applicable but the same will reach the Government in a couple of months, but under the reverse charge mechanism, the same tax is available almost immediately.