Shares of jewellery retailers such as Titan Company, PC Jeweller, Gitanjali Gems and Tara Jewels surged between 6 per cent and 15 per cent on Monday as the Goods and Services Tax or GST Council over the weekend fixed a tax rate of 3 per cent on gold and gold jewellery under the new indirect tax regime. The move by the Council, chaired by Finance Minister Arun Jaitley and comprising his state counterparts, was welcomed by the gems and jewellery industry.
“Currently, the industry pays taxes around 2 to 2.5 percent, so 3 percent is almost as good as no impact,” Aditya Pethe, a director at WHP Jewellers said. “With this taxation, many unorganised players will be encouraged to enter organised trade.”
Somasundaram PR, managing director, India, World Gold Council, said in a statement government’s decision on gold was an encouraging step and would help stabilise an industry in which millions are employed.
“This is a landmark day for the jewellery sector as the government rightly kept the overall tax burden low in the industry, keeping in mind the unique characteristics of the gems and jewellery sector, the ‘kaarigars’ and small jewellers,” All India Gems and Jewellery Trade Federation (GJF) chairman Nitin Khandelwal said in a statement.
He said this GST rate would help the gold and jewellery trade and it would mature as an organised sector in the years to come.
The GST Council in its previous meeting last month had fixed over 1,200 goods and 500 services in the tax bracket of 5, 12, 18 and 28 per cent.
Among shares of other jewellery makers, PC Jeweller jumped over 8 per cent to Rs. 548.85, shares of Gitanjali Gems and Tara Jewels gained over 8 per cent each. In comparison, the Nifty traded flat in early trade.