When the GST Council announced the GST rates, one of the last rates to be announced was the rate of GST on gold. The Council has decided to fix the rate of GST on gold at 3%. This is almost tantamount to maintaining status quo as gold currently attracts 2% tax. This includes 1% excise duty and an additional 1% as Value Added Tax (VAT). Thus the effective impact on gold is likely to be very marginal. GST on gold was extremely critical because a very high rate of GST would have encouraged gold smuggling as getting gold into India through informal channels would have been more profitable. By setting the GST on gold at 3%, the Council has virtually negated that possibility.

Let us understand the nuances of the gold GST rate. Apart from the 2% tax currently (1% excise + 1% VAT), there is an additional cess of 0.5%. All these charges are imposed on top of an import duty of 10% on gold. Therefore, post the GST, the total impost on gold goes up from 12.5% to 13%. That is actually quite an insignificant change in the overall GST impact on gold.