The finance minister has said that any sale of old jewelry would not attract GST. This is because as finance minister explains, selling old jewelry does not signify income making during a business; this is the reason, it would not be taxed.
Additionally, because the sale of old jewelry is not a business which is being run by the seller, this financial transaction would not be considered as a taxable supply. However, if the transaction takes place between an unregistered supplier and a registered one, charges would be added.
Almost 75% of the gold market is not identified. The small traders are struggling with the tax regimen because of the other compliance. In this type of scenario, this declaration came as a respite to the traders who are operating small scale.
In the era of GST, gold is the sector which gives rise to the tax evasion. This would be because the market is small and there are too many errors regarding the tax scheme. People usually get confused about which tax to pay and when.
Gold jewelry can be procured in three ways. One is to buy it from an unidentified source. The second one is to by importing it from a legalized source. The third way of procuring gold is to by smuggling. In case an unregistered person is selling the gold, there would not be any tax. Therefore, the gold sellers can import the gold through illicit channel and display transaction of old jewelry.
No one can avoid reporting a sale of new gold from bars. However, there is no definite news about whether saying the old sale jewelry is required or not. Other than tax evasion there is another drawback of this tax law; such a shift could create a problem for the organized sector.
To conclude it could be said that from the inception of GST, it had been feared that the tax law would give rise to gold smuggling. Now, the government seems to have presented the opportunity on a platter to the sellers and buyers.
