New Delhi, February 16, 2017
May settle for 4% rate; will also finalise draft Bills, confer on anti-profiteering body
The Centre and States are expected to take up the issue of taxation of gold when the Goods and Services Tax Council meets on February 18 in Udaipur.
“Almost all issues have now been finalised. The taxation of gold is one of the key pending issues,” said a person familiar with the development.
Sources said the Centre and States are veering towards a 4 per cent rate on the precious metal under GST, which would be higher than the existing rate, but not too high as this would lead to a surge in smuggling.
“We would back a 4 per cent GST on gold, which is in line with what was recommended in Chief Economic Adviser Arvind Subramanian’s report to the Finance Ministry,” said Kerala Finance Minister Thomas Isaac.
At present, there is a value-added tax of about 1 per cent on gold and excise duty of 1 per cent on non-silver jewellery.
It also attracts an import duty of 10 per cent. Most States agree with the Subramanian report, which had favoured taxing gold in the 2-6 per cent range as it would help keep rates under GST low and protect revenue, while not adversely impacting consumers as it is not a necessity.
The GST Council, headed by Finance Minister Arun Jaitley, has already finalised a four-tier rate structure of 5 per cent, 12 per cent, 18 per cent and 28 per cent.
At that time, it was decided that the rate on gold would be finalised later.
Another State official also ruled out multiple rates for services and said that these would be taxed at the same rates as goods. “There has been no discussion on this issue,” he added.
Draft GST laws
At the meeting this weekend, the Centre and States will also approve the draft model GST Bills for the Centre, States, Integrated GST and compensation law.
The Law Ministry is understood to have approved the language and draft of the model GST laws, and these will also be discussed by the sub-committee of officers on Friday, ahead of the Council meeting. If these are cleared by the GST Council, they will be introduced by the Centre and States in Parliament and State Assemblies in the Budget session to ensure the tax is rolled out from July 1.
Meanwhile, the Council is also likely to begin discussions on a proposed anti-profiteering agency, which will ensure that companies do not unfairly raise prices under the new tax regime. “The mechanism has to be discussed to see how effective such an agency can be,” said a source. The Council is also expected to finalise the definition of “agriculture” to ensure agricultural products and farmers remain exempt from GST.
[The Hindu Business Line]