Lack of GST Refund Mechanism Proves Harmful For Gold Sales

Due to the GST implementation, even foreigners and tourists are backing up in purchasing gold which they otherwise entitled to claim. The absence of refund mechanism has to lead to dump in sales of gold by NRIs and foreigners.

Integrated Goods and Services Tax Act of 2017 stats that the NRIs or foreigners are entitled to claim GST refund in case they visit India for duration lesser than six months. So in case an NRI purchases gold jewellery and stock bullion, he may claim 3 percent GST while leaving India.

Chairman at All India Gems & Jewellery Trade Federation (GJF) stated that, “The tax component is significant on account of the high value of the commodity and that becomes one of the decisive factors for a tourist to buy jewellery or not, The absence of the refund mechanism is dampening sales to tourists under GST.”

Also to concern is that the absence of refund mechanism pointedly outcomes to the export of taxes. Since the taxes are exported outside of India, it makes the gold jewellery of India less competitive in terms with other foreign countries.

Many of government officials clearly stated that the refund mechanism of taxes for foreigners and NRIs is must as the absence of it would further kill the sales of gold along with all those items which ingest much higher taxes at the time of purchase.