- The rate of GST applicable on gold bullion and gold jewelry is the same – 3%.
- However, when the bullion is purchased, GST will be applied once @3% and when the bullion is converted to jewelry, there will be another GST on the outward supply of such jewelry @3%.
- For imports, the 3% rate of levy equivalent to IGST
- All job work in relation to cut and polished diamonds; precious and semi-precious stones, or plain and studded jewelry of gold and other precious metals is taxable @ 5% (with full ITC)
- If the artisan is engaged on a principal to principal or business to business level, it is taxable
- If they are directly employed by the principal, the services will not be taxable under GST, as services by employee to employer are not liable to GST
Levying tax on supplies involving two or more goods/ services or both?
- If the supplies are independent for independent consideration, then the rate as applicable for such supplies will apply.
- If the transaction is a ’composite supply’ or a ‘mixed supply’, then the treatment will be as set out below.
Composite supply means a supply consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other
Ex: If gold ornaments of 100 gms (with packing) is sold for Rs. 2,80,000/- and labour charges totaling to Rs. 40,000/- is also charged on the same transaction, total value of transaction being Rs. 3,20,000/-
ANSWER The gold will be taxed at 3% and the labour at 5%.
Mixed supply means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply (e.g. services of re-making along with supply of additional gold and stones)
Ex: How will the exchange of old jewelry worth Rs. 10,000 plus cash of Rs. 5,000 for new jewelry priced at Rs. 15,000 be treated under GST?
ANSWER GST is to be paid on the “open market value” (i.e. retail price) of the new item of jewelry, i.e. Rs. 15,000.
If the “open market value” is not known, GST will be paid on the amount of money paid by customer plus the value of old gold jewelry given by customer (i.e. Rs. 5,000 plus Rs. 10,000).
Job work treated as “supply of service” and subject to 5% of GST
If job worker is “Not registered” GST will be payable by the principal under the reverse charge mechanism.
GST on job worker
- Inputs and capital goods may be sent to a job worker without payment of tax, it must be return within 1 to 3 years (Depends)
- If it is not return then it can be treated as supply, and job worker need to pay GST along with Interest
- If job work is not good and re-do the job no extra GST charged, unless job worker intimate extra cost on work
- If the wastage in job work impact the amount of making charge then wastages should be calculated on GST, or else not required
Old jewelry for repairs or making new: No
Return of goods by the job worker: No
Invoicing requirements under the GST
- Invoice pertaining to supply of goods must be issued at the time of removal or delivery of goods
- Invoice pertaining to supply of service must be raised within 30 days from the date of supply of service Invoice shall contain all the particulars specified under the Invoice Rules
- Goods must be classified as per HSN (Harmonized System of Nomenclature) and services as per SAC (Services Accounting Code) QUERY 4 How will the goods be classified
Essential or must’ compliances under GST:
Registration once the threshold is crossed or if registration is compulsory – Issuance of invoices or other prescribed documents – Filing of details, returns on monthly basis, annual return – Payment of tax by the due date – Maintaining the prescribed accounts and records – Implementing any pricing changes which may be required by the anti-profiteering clause
The Goods and Services Tax (GST) for gold was fixed at 3% and an additional, the tax on making charge at 5%.
The spike in the rate of gold can due to the import duty which has been retained. Currently, gold attracts an import duty of 10%, in addition to 3% GST, and 5% making charges (GST).
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