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At present, 3% GST is levied on gold and silver, but now by increasing this GST, the government can impose 5% GST on gold and silver. The government had earlier reduced the basic customs duty while presenting the budget. The government has reduced the basic customs duty on gold bars from 15 percent to 6 percent. The total tax on gold is now 9 percent, which was earlier 18.5 percent. Also, the effective tax rate on silver has also come down to 9 percent.
GST rate may increase
Finance Minister Nirmala Sitharaman mentioned simplifying and rationalizing the GST rate in the budget. In such a situation, the GST rate which is currently 3 percent is likely to be increased to 5 percent. A part of the revenue loss can be compensated by increasing the GST rate. So on one hand the price has come down but on the other hand the GST rate may increase.
State government can benefit
Importantly, the increase in GST rate is good news for the state government, because if the GST rate is increased, it provides more revenue than its share in the revenue. Cess and surcharge revenue is not shared with the state government. A report says that since state governments get a larger share of tax revenue, they are more inclined to take action against smuggling.
Gold prices rose on budget day
Gold prices on the Multi-Commodity Exchange have risen from the lowest level of Budget Day by more than Rs. 900. It can also be said that the price of gold reached close to Rs 71 thousand on Friday. On Thursday, gold touched the level of Rs 70 thousand for the first time since July 23. According to MCX data, on Friday gold fell by Rs. 165. Closed at Rs 69,954 per ten grams. However, during the trading session, gold also reached Rs 70,965 per ten grams.
Big drop in silver prices
Talking about silver, the price of silver fell by Rs 101 per kg on Friday. However, there was no improvement in the price of silver after July 23. Still, the price of silver is trading at Rs 6,522 less than the highest level of July 23. However, on Friday the price fell to Rs. 83,702. Which had reached a low of Rs 81,506.