Presently, gold jewelry retailers are imposed with about 1% tax in most states, except Kerala wherein 5% VAT is levied. As Government of India implements GST, 3% tax will be extracted from the gold jewelers, but ICRA insists that the demand for gold products will remain constant, reasoning that waving off of farm loans in rural areas and increasing disposable income in urban parts of the country will provide the necessary traction in order to maintain the balance.
Increased Income to Make Up for Incremented Gold Tax
Under GST, besides waiver of loan for the farmers in a few states, several other benefits will be offers to the rural population, such as favorable monsoon guidance, reduced support prices, and employment guarantee scheme. On the other hand, those living in the urban cities in India will be able to gain from pay revision of state government employees and profitable demographic spread. Gold remains at the backbone of India’s cultural fundamentals, and evolving lifestyle is expected to sustain, if not increment, the demand for the vendors in gold jewelry.
Unorganized Vendors Must Fall in Line
GST is aimed at streamlining several sectors, so that government can keep a relentless track of the transactions and curtail corruption. Gold jewelry industry is only a nominal part of the reforms, wherein organized vendors will not be affected, but the unorganized local vendors will have to comply with the nation-wide guidelines, maintaining factors such as assurance of purity and quality.
Targeted advertisement campaigns, prudent inventory management, enhanced branding, investments in internal controls systems, dependable access to the funds are some of the factors that will lure the vendors of gold jewelry in India to organize their business and strengthen the position of organized retailers in the near future.