An Overview on FY19 Gold, Gems and Jewellery Export Owing to GST
Posted by Anuj Pandey on May 29th, 2019
On the historic 30th June 2017 when GST replaced India’s labyrinth of taxes – all sectors including the gold industry were affected by this new fiscal reform. The World Gold Council stated that GST created an initial higher tax rate for gold, but the overall impact of GST on gold exports in India has been positive ever since.
Scenario of gold industry post-GST
Previously, multiple indirect taxes crippled the gold export market and showed decline in exports. With the introduction of GST identification number as a mandate for gold, gems and jewellery, the compliance burden to exports and the numbers now show a steady rise.
The World Gold Council confirmed in Financial Year 2019 that GST introduction has allowed organised trade and branded retailers to comply with the gold export scenario easily. Post-GST marks an era of increased efficiency of the supply chain. Moreover, the advent of GST registration procedure procured numerous benefits.
Overview of GST implementation on gold and jewellery sector
Impact of GST on gold and jewellery as in Financial Year 2019 are mostly positive like –
It's estimated that 30-40 tonnes of gold were smuggled from the Middle-East in pre-GST era by the unorganised sector. Now, after the introduction of GST on gold sector, jewellery businesses will not be able to benefit illegally by avoiding taxes. This would open up an opportunity for the jewellers to compete on level ground. Moreover, this transparency and greater accountability prompted several jewellers to transfer to an organised area.
The impact of GST registration procedure has exhibited over 5% growth in gold jewellery export in Financial Year 2019 – as confirmed by the Gems and Jewellery Export Council. After the introduction of GST, India saw a steady rise in demand for gold overseas. The World Gold Council stated that India’s export of gold and gems jewellery increased from Rs. 33090 Crore in FY 2018 to Rs. 43,600 Crore in FY 2019.
Simple taxation under GST regime fuelled the growth of setting up gem and jewellery business. Previously, every jeweller had to get VAT registrations which varied from one state to the other. This complicated the process of obtaining and complying with regulations.
With simplistic GST registration procedure, the taxation is centralised and standardised. Now, only a single registration is applicable across the nation, thus improving the chances of opening a jewellery business.
So, if you’re about to open a new jewellery business, the simplified tax structure would aid the process. Moreover, if you want to fund your business, you can avail a loan from a financial institution without any hurdle. Alternatively, you can also avail a Business Loan from NBFCs like Bajaj Finserv up to Rs. 30 Lakh to kick-start your new venture. This collateral-free loan comes with minimal documentation and flexible repayment tenor.
One of the significant benefits of GST is the efficiency and removal of avoidable logistical expenses. Now, jewellers are not forced into maintaining a stockpiled inventory to meet client demands. Considering most of India’s raw gold is imported, GST has simplified the duties and organised the duty structure leading to easier transportation. Better logistical downtime thanks to the easier GST registration procedure has improved the overall supply chain of the whole industry.
Summing up from the various ways how GST on gold impacted jewellery sector, it has been a right step towards greater transparency, accountability and growth. It will reduce the unorganised sector and pave the way for the growth of the organised.
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About the AuthorAnuj Pandey
Joined: June 30th, 2017
Articles Posted: 22
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