Concerns over unchecked tax evasion on gold under the Goods and Services Tax (GST) regime were raised at the first meeting of the ‘Group of Ministers (GoM) on movement of gold and precious stones’ held on Saturday.
The panel, which has six state finance ministers, has decided to call representatives from MMTC and other gold importing agencies, along with representatives from the Income Tax Department and Central Board of Indirect Taxes and Customs in its next meeting to suggest measures to curb the revenue leakage on gold.
Separately, the GoM on IGST settlement, headed by Bihar’s Deputy Chief Minister Sushil Modi, also met Saturday. Puducherry and Delhi had raised issues about Integrated GST (IGST) settlement since it was given as per devolution formula, but since the Union Territories are not covered under finance commission, they didn’t get the IGST share.
“Discussions were held on what would be the formula to restore it. Those would continue in the next meeting. Law department would also explain the legal position of the fund settlement,” a state finance minister said.
The GoM on gold and precious stones, headed by Kerala Finance Minister Thomas Isaac, was formed in November 2019 to examine feasibility of implementation of e-way bill requirement for movement of gold and precious stones, which are exempt from e-way bill as of now.
Two state finance ministers, who attended Saturday’s meeting, said that e-way bill generation for gold and precious stones may have security concerns from traders because then any such consignment can be easily tracked. Further, it has been learnt that states such as Gujarat and West Bengal said such a system won’t be practical since many gold traders transport jewellery on foot or through railways or bus and not necessarily trucks.
“Even a small stone could be worth lakhs of rupees. So, security concerns about e-way bill generation are there which need to be looked into. But more importantly, there was consensus that there is GST evasion on gold,” a state finance minister said.
It has been learnt that Kerala emphasised on the gold evasion, saying the state used to earn Rs 600 crore from gold before GST, which has now come down to Rs 300 crore after the GST rollout. “Pre-GST and post-GST revenue trend of gold and precious stones will now be analysed in the next meeting,” the minister said.
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