No relief on making charges
GST: The bullion traders had hoped that the GST reform 2.0 announced by the government would get rid of the problem of double taxation, but no relief was given on the making charge in the decisions. This has caused disappointment and dissatisfaction among the traders. Jewellery traders say that due to double taxation their sales are being directly affected and an additional burden is increasing on the pockets of consumers .
GST on making charge and the demand of businessmen
Currently, when buying jewellery, 3% GST is levied on the price of gold and 5% GST on making charges. This creates a situation of tax on tax. For example, if a customer buys gold worth ₹1 lakh and pays ₹10,000 as making charges, he has to pay a total GST of ₹3,500.
Traders argue that making charge is the value of the artisan’s art and labour, not the price of the product. Imposing 5% GST on it is against the interests of artisans. Traders have been demanding for a long time that making charge should be kept out of GST or its rate should be reduced to provide relief to both consumers and artisans.
Inclination towards unorganized sector and impact
Due to double taxation and high rates, many small traders are moving towards the unorganized sector. They sell without bills or adopt other methods to save taxes. This not only causes loss of revenue to the government but also increases the pressure on those doing business honestly.
Additionally, the growth of the unorganised sector has also raised questions on the quality and purity of gold. It becomes difficult for consumers to differentiate between real and fake, thereby weakening their trust. As a result, the transparency of the market is affected and competition becomes uneven.
Relief in consumer goods and market expectations
Experts believe that even though GST rates on gold and silver remain unchanged, consumers have got relief due to reduction in rates on other items. The reduction in rates on everything from cars to medicines and flour to hotel rooms has had a direct impact on the pockets of common people.
The reduction in prices during the festive season has increased purchases, which is also likely to indirectly improve the sale of gold and silver. However, bullion traders were expecting a reduction of at least 0.5% to 1% on the making charge, which could not be fulfilled at the moment.
How does the problem of double taxation affect consumers?
Customers have to pay GST twice on the same jewellery. 3% tax on the price of gold and 5% tax on making charges makes the purchase expensive, which increases the additional burden on the common consumer.
What is the impact of small businessmen moving towards the unorganized sector?
When traders operate without bills or use tax-evading methods, government revenues are reduced. Also, questions on quality weaken consumer confidence and honest traders also find it difficult to compete.
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