Gold is highly volatile in the Financial Market due to the fluctuation of its price. The Centre Government fixed the GST based on the transaction of the Gold. So, here in this article, you will get to know about the Decoding GST Levied On Gold Purchases. The decoding process will help you to buy the gold effectively as it will give you a clear picture of the tax levied on Gold.
In general, if you buy any gold ornaments, then only 3% tax you will have to pay and it is included in the price. This means, the Centre has put 3% GST on gold ornaments and the same is charged on the total value of the purchased gold.
An Illustrative way to know GST levied on gold purchase
Let us understand briefly with an example. Suppose, if you purchased gold worth Rs 50,000 per 10 gm, then you will have to give two additional charges excluding the base price, one is the making charge and another is the GST. Generally, the making charge of gold is 10% of the gold value. So, here the gold price including the making charge will be 10% of Rs 50,000, i.e., Rs 55,000. The next charge is GST and it is 3% of the total value of gold, i.e., Rs 55,000. If you go with the calculation, then the total value of the purchased gold will be Rs 56,650.
However, if you retain any gold ornament and need to redesign the same, then you will have to pay a GST of 18% on the making charge. The hike in GST from 3% to 18 % on the same goods is just because you possess the gold and not purchasing the new one.
Variation of GST levy on Gold
The purchase of gold varies a lot and as a result, GST on gold also differs. Apart from direct purchases, the other purchases are digital gold, gold exchange-traded fund, and gold sovereign bond. In the case of digital gold, 3% GST is levied on the gold and the same case lies with the exchange-traded fund. As you aren’t buying physical gold but a sovereign gold bond, so no GST is levied.
What should new entrepreneurs do?
If you run a business dealing with the sale and purchase of gold, then GST is mandatory. If you retain the GST number, then you will have to go for GST return filing. The process is very simple, but if you are unaware of tax norms and other financial terms, then it will be a tough task for you.
However, if you started a new business dealing with gold, then make sure to go with the GST registration. Through this way, the Government generates the money and your business becomes legal.
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