The fact GST on Jewellery: Rules, Responsibility, and Issues

Author : Marg ERP | Published On : 30 Jan 2024

GST on Jewellery: What You Need to Know

The Goods and Services Tax (GST) has changed the way taxes are levied in India on various goods and services. One such sector that has experienced major changes is the GST on jewellery. Everything you need to know about GST on jewellery, including input tax credit, tax rates and exemptions, and compliance requirements, will be covered in this article.

Tax Rates on Jewellery

Depending on the kind and value of jewellery, different rates of GST are applied.

The following are the tax rates on jewellery:

3% GST is applied to gold and diamond jewellery.
5% GST is applied to the price of gold and diamond jewellery.
18% GST is charged while creating silver jewellery.
GST-free sales of antique gold
It is essential to remember that the 3% GST rate on jewellery made of gold and diamonds only applies to the jewellery value—not to the costs incurred in creating it.

Input Tax Credit

Businesses can claim credit for the GST they paid on purchases made for business use through the Input Tax Credit (ITC) method. Jewelers can get an input tax credit for the GST they have paid on labor, rent, energy, and other expenditures, as well as on raw materials like gold, silver, and diamonds. ITC, however, cannot be recouped when charging.

Compliance Requirements

To make sure they fulfill their tax duties, jewelers must abide by several GST laws.

The following are the requirements for jewelers to comply with:

Registration: Jewelers must register under the GST if their yearly sales exceed Rs. 40 lakh.
Invoicing: Jewelers must provide GST-compliant invoices for every transaction, even ones to registered individuals.
Return Filing: Depending on their turnover, jewelers must file monthly or quarterly GST Software.
Records Maintenance: Jewelers are expected to keep thorough records of every transaction, including purchases, sales, and outlays.

Exemptions

There are several categories of jewellery that are free from GST software, including:

Simple gold and silver jewellery: GST is not applied to simple gold and silver jewellery that does not include pearls or stones set in it.

Specific handcrafted jewellery: GST is not applicable to handcrafted jewellery created by craftsmen.

Traditional jewellery: Items like Kundan, Polki, and Jadau jewellery that are regarded as a part of Indian culture and tradition are free from the goods and services tax (GST).

Impact of GST on the Jewellery Industry

The introduction of the Goods and Services Tax has had a significant influence on the Indian jewellery software industry. Although the transition to a single tax system was expected to increase organization and simplicity, it has also presented certain difficulties for customers, sellers, and makers of jewellery.

The industry's biggest difficulty throughout the shift to the new tax structure was this. Jewelers faced more paperwork and handling costs as a result of having to submit returns, claim input tax credits, and conform to new laws. Jewellers also had some logistical difficulties as a result of the use of the e-way bill system for the delivery of products.

The sector also had to deal with the rise in tax rates. The entire cost of jewellery increased as a result of the 3% GST on gold and diamond jewellery and the 5% GST on production costs. Because of the higher tax rates, customers could be reluctant to spend more on jewellery, which affects consumer demand.

Still, the jewellery business has benefited somewhat from the GST. For instance, the introduction of the Goods and Services Tax (GST) has created fair conditions for all jewelers, regardless of their size—from great manufacturers to independent craftsmen. In addition to reducing tax cheating, the GST has increased industrial openness.

Still, the jewellery software has benefited somewhat from the GST. For instance, the introduction of the Goods and Services Tax (GST) has created fair conditions for all jewelers, regardless of their size—from great manufacturers to independent craftsmen. In addition to reducing tax cheating, the GST has increased industrial openness.

Compliance Challenges and Solutions for Jewellery Businesses under GST

As previously said, to make sure they fulfill their tax requirements, jewelers must conform to several GST laws. However, conforming to these rules can be difficult, particularly for small and medium-sized jewellery shops.

The following are some compliance issues that jewelers might face and possible fixes for them:

Flexible and Growing Tax System: The Goods and Services Tax (GST) regime is characterized by regular modifications to its tax rates and regulations. Jewelers need to stay on top of these developments and make sure they follow up to the most recent

Regulations Solution: To manage their tax compliance and keep current with the most recent

regulations, jewelers can employ software solutions or engage the services of a tax adviser.

Invoicing: Jewelers must provide GST-compliant invoices for each sale under GST laws. Making invoices that comply with GST, however, may be difficult, particularly for small enterprises. Solution: To make it simpler to comply with GST laws, jewellers may utilize invoicing software that automatically creates invoices that are GST compliant.

Record-keeping: Jewelers must keep thorough records of all actions, including purchases, sales, and costs, under GST laws. However, maintaining track of these documents may be difficult, particularly for small companies. Solution: Jewelers may automate record keeping using software solutions, which will help them comply with GST requirements and avoid paying fines for failing to comply.

Conclusion

In conclusion, the start-up of the GST on jewellery aims to improve trust and openness within the sector. While there are several limits that jewelers must follow, some types of jewellery are free from GST. Jewelers must be aware of the tax rates, input tax credits, compliance requirements, and exemptions to fulfill their tax duties and stay out of trouble.