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Proposal for GST under reverse mechanism draws mixed response from jewelry sector

  • | Divita S Gupta

Proposal for GST under reverse mechanism draws mixed response from jewelry sector

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.


Avalara helps businesses of all sizes get GST return filing, e-way bill generation and e-invoicing right with cloud-based GST compliance solutions in India. Goods and Services Tax (GST) rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Divita S Gupta
Avalara Author Divita S Gupta
Divita has served as a writer and editor for top financial services organizations in India. She has written on topics like mutual funds, insurance, taxes, SME financing for globally recognized banking and financial organizations including ICICI, Aditya Birla Group, News Corp. With a Masters in Business Administration from Symbiosis International University, she currently owns a small business in Mumbai.

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