The Indian government has accepted the recommendations of the Gem & Jewellery Export Promotion Council (GJEPC) and exempted jewellery exporters from paying the Integrated Goods and Services Tax (IGST) on gold imports through government-designated importers known as Nominated Agencies.
Until now, a 3 percent IGST was applicable to jewellery exporters who sourced their gold from the Nominated Agencies — mainly state-owned banks and other state-owned bodies such as the Minerals & Metals Trading Corporation (MMTC). While the banks themselves had been exempted from paying GST on the imports of gold, it was still levied from importers, who did so through bank guarantees that tied up a significant portion of their working capital.
GJEPC Chairman Pramod Agarwal observed, “We commend this step undertaken by the government. On the GJEPC’s recommendations, the GST Council ruled that it was satisfied that it was necessary in the public interest to exempt the intra-state supply of gold…when supplied by a Nominated Agency under the ‘Export Against Supply by Nominated Agency’ scheme. We are also expecting a similar relief from the government for exporters of articles of silver and platinum very soon.”
Agarwal added, “The upfront payment of IGST and Import duty in the form of a bank guarantee had further led to huge working capital blockages for various small and medium jewellery exporters, increased interest cost, and hassles of compliance to claim refunds — all of this consequently impacting their business operations and global competitiveness.”