The Kerala Jewellers Association is advocating for a standardized gold tax rate of 1.25% under the Goods and Services Tax (GST) framework. This initiative aims to simplify the existing complexities and inconsistencies in gold taxation across the state. By establishing a uniform tax rate, the association believes it will promote fairness and compliance in the gold sector, making it easier for both traders and consumers to navigate the tax landscape.

Reform is necessary because the current gold tax structure in Kerala is complicated and varies significantly across different states. This inconsistency leads to confusion among traders and consumers alike. The Kerala Jewellers Association argues that simplifying the tax system by eliminating the purchase tax on gold jewellery will reduce the compliance burden on merchants and enhance transparency in the jewellery market. Minister Thomas Isaac has acknowledged these concerns and is committed to addressing them in upcoming assembly sessions.

The taxation model for gold in India is quite varied, with different states imposing their own tax rates. For instance, Kerala has a VAT of 5% on gold jewellery, generating around Rs. 400 crores annually. In contrast, Tamil Nadu collects about Rs. 100 crores with a lower VAT rate. This inconsistency in tax rates leads to a misalignment with the four-tier GST structure (5%, 12%, 18%, and 28%), complicating compliance for gold traders across the country.

As discussions around GST continue, it's crucial for gold businesses to prepare for compliance ahead of the upcoming deadlines. Here are some key steps they should consider: first, ensure timely registration in the GST system to avoid penalties. Second, plan strategically for logistics and warehousing to meet compliance requirements. Lastly, adopting technology solutions that streamline tax compliance processes can make a significant difference. Staying informed about the evolving GST landscape will be vital for navigating these changes successfully.

The All India Gems and Jewellery Trade Federation supports the initiative for a fixed tax rate of 1.25% for gems and jewellery, aligning with the Kerala Jewellers Association's stance. This collective effort aims to address the complexities of gold taxation and promote a more consistent framework across the country. By having a unified tax rate, the federation believes it will help improve compliance and transparency in the gold market, benefiting both traders and consumers.

The proposed changes in gold taxation could significantly impact traders by simplifying the compliance process and reducing the burden of multiple taxes. A standardized tax rate of 1.25% could lead to easier financial planning for traders, as they would no longer have to navigate a complicated web of state-specific taxes. However, with the implementation of GST not taking effect until the next fiscal year, traders are concerned about accumulating compound taxes in the meantime, which could strain their businesses.