MUMBAI: India will tax gold at a rate of 3 percent under a new nationwide sales tax that becomes effective July 1, the government said on Saturday.
The Goods and Services Tax (GST) on gold, which was lower than industry expectations of around 5 percent, will replace a number of federal and state levies.
“In the case of gold, keeping various factors in mind, because there was an extensive debate ... we finally reached a consensus of taxing gold at 3 percent,” Finance Minister Arun Jaitley told reporters in New Delhi after a meeting of the GST Council.
The council comprising federal and state government representatives is preparing the landmark tax measure.
Gold jewelry, silver and processed diamonds will also be taxed at 3 percent, while the tax on rough diamonds will be 0.25 percent, Revenue Secretary Hasmukh Adhia said.
The gems and jewelry industry in the world’s second-biggest gold consumer welcomed the tax rate, saying it will help the sector become more compliant and mature.
“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 unorganized players will be encouraged to enter organized trade.”
Anticipating a higher tax rate, Indian jewelers have been restocking inventory, a move that was expected to hit imports of the metal in the second half of the year when gold demand is higher due to festive season buying.
Prime Minister Narendra Modi’s government is pinning hopes on the GST to boost economic growth that slumped to 6.1 percent in the quarter to March.
The India head of the World Gold Council (WGC) said the government’s decision on gold was an encouraging step and would help stabilize an industry in which millions are employed.
But with a customs duty of 10 percent, the total tax on gold is still high and will continue to have an impact on the jewelry industry, Somasundaram PR, Managing Director, India, WGC, said in a statement.
“This may be an opportune time for the government to cut the import duty and bring down the total tax on gold significantly so unauthorized imports are totally eliminated and the industry embraces transparency in letter and spirit under GST,” he said.
The tax on cotton will be 5 percent, ready-made garments 12 percent and hand-rolled Indian cigarettes or bidis 28 percent, Jaitley said.
Apparel costing less than 1,000 rupees ($15.53) and footwear below 500 rupees will attract a tax of 5 percent.
New Delhi has already decided to tax telecoms and financial services at a uniform rate of 18 percent and transport services at 5 percent.
India to levy 3% tax on gold
India to levy 3% tax on gold
G7 countries to release oil reserves as IEA agrees to largest ever market intervention
- IEA recommends release of 400 million barrels
RIYADH: Germany, Japan and Austria will release part of their oil reserves after the International Energy Agency recommended the release of 400 million barrels of oil from stockpiles, the largest such move in IEA history.
In a statement, IEA Executive Director Fatih Birol said the flow of oil, gas and other commodities through the Strait of Hormuz have all but stopped, leading global energy supply to fall by around 20 percent.
Ahead of the confirmation of the move — a larger intervention than the 182.7 million barrels that were released in 2022 by in response to Russia’s invasion of Ukraine — several countries began setting out plans to bring their reserves into play as countries grapple with soaring crude prices amid the US-Israeli war with Iran.
Birol said: “I can now announce that IEA countries have decided to launch the largest ever release of emergency oil stocks in our agency's history.
“IEA countries will be making 400 million barrels of oil available to the market to offset the supply lost through the effective closure of the strait.
“This is a major action aiming to alleviate the immediate impacts of the disruption in markets.”
Germany’s Economy Minister Katherina Reiche confirmed on Wednesday her government plans to limit petrol price increases at filling stations to once a day and to introduce more stringent antitrust regulation of the sector.
She did not give an exact timing for those measures, but added that the US and Japan would be the largest contributors to the release of the oil reserves.
The US has not confirmed it would do so, but its Interior Secretary Doug Burgum told Fox News on Wednesday that “these are the kinds of moments that these reserves are used for.”
The announcements did not stop oil prices rising, with Brent crude up 3.26 percent to $90.66 a barrel at 4:29 p.m Saudi time, and West Texas Intermediate up 3.12 percent to $86.05. Both were some way below the $119 a barrel seen earlier in the week.
“The situation regarding oil supplies is tense, as the Strait of Hormuz is currently virtually impassable,” Germany’s Reiche said.
“We will comply with this request and contribute our share, because Germany stands behind the IEA’s most important principle: mutual solidarity,” Reiche said about the IEA’s request.
According to a statement by Reiche’s ministry, Germany will contribute 2.64 million tonnes of oil. This corresponds to 19.51 million barrels.
Reiche stressed there was no supply shortage in the country, which has a legally mandated reserve of oil and oil products intended to cover 90 days’ demand.
South Korea will release 22.46 million barrels of oil, which represents 5.6 percent of the total IEA ask, the country's industry ministry said.
“The government will consult with the IEA secretariat on details, such as the timing and amount, from the perspective of national interests in accordance with domestic conditions,” the ministry said in a statement.
The ministry said it would continue to coordinate closely with major countries in responding to high oil prices to minimise any domestic impact.
Austrian Economy Minister Wolfgang Hattmannsdorfer said his country was releasing part of the emergency oil reserve and extending the national strategic gas reserve, adding: “One thing is clear: in a crisis, there must be no crisis winners at the expense of commuters and businesses.”
Acting ahead of the IEA move, G7 member Japan announced plans to release 15 days' worth of private-sector oil reserves and one month's worth of state oil reserves.
“Rather than wait for formal IEA approval of a coordinated international reserve release, Japan will act first to ease global energy market supply and demand, releasing reserves as early as the 16th of this month,” Prime Minister Sanae Takaichi said in a broadcast statement.
Following a meeting with the IEA on Wednesday, G7 energy ministers said: “In principle, we support the implementation of proactive measures to address the situation, including the use of strategic reserves.”
All IEA member countries are required to keep 90 days’ worth of their nation’s oil use in reserve in case of global disruption.
