India has allowed 36 banks and five agencies, including MMTC and MSTC, to import gold without paying a 3 per cent integrated goods and services tax (IGST), removing an additional burden the financial institutions were complaining about.
However, gold refineries which import dore gold or unrefined gold, will still have to pay the IGST and hence, they are at a disadvantage compared to refined gold importers.
Ealier, importers had their working capital blocked until they got the refund on the GST paid by them. The new notification removes that hurdle and smoothens the process of import. Analysts said gold imports on a consignment basis, which had almost stopped after the implementation of the GST, will resume again.
In the case of consignment import, an importer kept gold ready in stock and it was priced when sold. This was helpful as sudden demand helped banks to give virtually spot delivery.
However, due to the 3 per cent IGST payable on imports, banks and other agencies had stopped it. The latest notification doesn’t change anything for traders who will have to pay 10 per cent import duty and 3 per cent IGST and claim back the IGST as input credit.
The Indian Bullion and Jewellers Association, however feels that removing the IGST on gold imports and not on dore imports (gold dust) will kill Indian gold refining industry.