Merchants’ body urges reduction in GST on gold ornaments to stimulate demand
The All Kerala Gold and Silver Merchants’ Association has sought reduction of GST on gold ornaments from 3 per cent to 1 per cent with immediate effect, or through a phased approach, to ensure affordability, stimulate demand, and protect the interest of small traders and artisans.
When GST was introduced in 2017, the average price of gold per sovereign (8 grams) was around ₹20,000, and the GST payable was approximately ₹600. Today, the market rate for the same quantity is above ₹75,000, pushing the GST burden to over ₹2,250 per transaction for consumers.
The steep increase in the absolute tax amount has hit affordability, affecting purchases for weddings and traditional events, said K Surendran, President, and S Abdul Nazar, General Secretary of the association. Sales volumes had fallen, impacting lakhs of artisans, retailers and small-scale manufacturers.
Besides, it was incentivising unorganised and parallel markets, reversing the positive shift towards formalisation that GST was meant to achieve, they said.
The gold and jewellery sector contributes approximately 8 per cent to India’s total GDP, and it supports over 5 crore livelihoods, particularly in traditional clusters such as Kerala, Tamil Nadu, Gujarat, Rajasthan and West Bengal. The sector is one of the largest employers of skilled artisans in India, many of whom operate in the MSME and informal sectors.
Reducing GST on gold ornaments will, therefore, have a multiplier effect — increasing demand, formalising more trade, boosting tax compliance and preserving traditional occupations.
“We believe that the GST rate structure must reflect the ground reality, where high gold prices and fixed percentage tax regimes are stifling middle income consumers and small traders alike,” they added.
Source: https://www.thehindubusinessline.com/