Kerala Demands 5% Tax on Jewellery

New Delhi: Kerala’s finance ministers Mr. Thomas Isaac who was attending the crucial 14th meeting of the Goods and Services Tax (GST) Council sounded confident of rolling out the country’s largest tax reform since Independence on 1 July, but wanted the meeting to iron out some issues of local importance.

Mr. Thomas told reporters that the state wants jewellery to be taxed at 5% against 1.5% that the industry has been demanding.

“Gold is a luxury product. It is not a necessity. Price of gold has quadrupled in the last one decade. Nobody had any problem. What is the big trouble with a 5% tax on jewellery. We are very reasonable people (at the Council). We will discuss,” said Isaac.

The minister said he was confident of the Council meeting the 1 July deadline as it is only a question of a few details to be finalised. The Council is set to finalise fitting various goods and services to the rates identified earlier. While services may attract 12% or 18%, goods may fall into any of the five slabs—5%, 12%, 18%, 28% and 28% plus cess.

Delhi deputy chief minister Manish Sisodia said he has raised some concerns. “The definition of the destination where a service is delivered is very vague. For example, in the case of advertising services delivered across the country, how will we define the destination and how the tax collected will be apportioned. If not today, this issue has to be taken up in the future,” said Sisodia. The minister said that on Thursday and Friday, the Council will discuss the fitment of commodities and services in the tax rates.

J&K finance minister Haseeb Drabu, who is hosting the meeting in the state capital, said GST will eliminate the cascading effect of taxes, that is tax on tax, which will benefit consumers. “Importing states such as J&K will benefit from GST as it is destination-based tax on consumption. It is our estimate that the state will benefit by Rs1,500-2,000 crore a year because of this shift to GST. Common man will benefit from lower prices,” said Drabu.

The industry is waiting for clarity on the tax rate that commodities and services would attract to manage the transition, although policy makers have been saying it would be a revenue neutral exercise.

  • Kerala Demands 5% Tax on Jewellery