New Delhi – All the banks that import gold and various precious metals would now have to pay a 3% goods and service tax which later can be claimed as input tax credit. The Central Board of Excise and Customs (CBEC) confirmed that earlier banks were not supposed to pay any VAT on the import of the precious metals.

CBEC confirmed this news on gems and jewelry by answering the frequently asked questions. Earlier only the customs duty was supposed to be paid, but now due to the implementation of GST, the banks are expected to pay 3% as integrated GST (IGST) on all the precious metals in addition to the basic customs duty. IGST would be allowed to be taken as input tax credit by the banks.

It has also been confirmed that the banks would be liable to pay the IGST on the import of precious metals but not to any overseas supplier in which the ownership is laid during the movement. In another statement, the banks will have to pay all the taxes due and not the body that is overseas because it is the bank who is initiating the imports and not the overseas entity.

Currently, a 10% basic customs duty is applied to the import of gold and a 12.5% countervailing duty (CVD) over and above that but before GST. Considering that the CVD was dissolved due to the implementation of GST, hence now the GST of 3% will have to be paid at the time of imports.

This came into effect on 1st July and came under the tax of integrated goods and service tax. It was also clarified that in cases where the total value of gold is more than ₹ 30,000, the GST payable would be 3% of the total bill or the transaction cost. This would be irrespective of whether the making charges are shown separately or included in the bill.