New Delhi: Banks importing gold and precious metals will have to pay 3% tax under the GST which can be claimed as input tax credit, the government has said.
Clarifying issues on GST on gems and jewellery through Frequently Asked Questions (FAQs), the Central Board of Excise and Customs said banks did not pay any VAT on import of precious metals previously.
They only paid customs duty. However, under GST, “3% Integrated-GST is payable on all imports of precious metals in addition to the basic customs duty. IGST paid can be taken as input tax credit by the banks."
It also said banks would be liable to pay IGST on such imports and not any overseas supplier in which ownership is vested during movement of gold or silver.
“Ownership is not material for determining whether an import has taken place. Banks, being registered entities, would be liable to pay IGST on such imports but not the overseas entities since they are not effecting the import," the FAQ said.
Import of gold attracts a 10% basic customs duty. On top of that a 12.5% countervailing duty (CVD) was levied prior to GST.
Since GST subsumed CVD, hence the GST rate on gold at 3% has to be paid at the time of imports in the form of IGST with effect from 1 July.
The CBEC also clarified on levy of GST where the total value of a gold ornament is Rs30,000, including Rs2,000 as making charge saying, “GST is payable at the rate of 3% of the total transaction value of jewellery, whether the making charge is shown separately or not".