5% Purchase Tax: Gold Company in Kerala on Warpath over Rs 2,600 cr avis
The gold trade in Kerala is on the warpath against the will of the ruling LDF government to levy a 5% purchase tax, retroactive from 2013-2014. The purchase tax on gold was introduced by the previous UDF government. The Kerala Jewelers Association (KJA) protest, led by Kalyan Jewelers Founder TS Kalyanaraman, Bhima Jewelers B President Govindan and Malabar Gold President MP Ahammed, kicked off on Monday with a rally in the state capital. The state tax department served notices on jewelers to the tune of 2,600 crore.
“The previous government, which introduced the tax, had not collected it because there was no consensus on finalizing a method of collecting the tax,” a KJA spokesperson said. They argue that the previous government “inadvertently” included this tax in financial bills presented by UDF Finance Minister KM Mani. According to Ahammed, the industry has filed several representations with the state government, with few results. The system of combining sales tax and purchase tax, as slapped in the state, is specific to Kerala.
The purchase of gold, silver and platinum in any form is subject to 5% VAT (value added tax) in Kerala. The exchange of old jewelry is also treated as a sale under state VAT policy. Since customers or individuals are not registered sellers, it is the jewelry store’s responsibility to collect it from customers and pay it to the government. Kerala sales tax revenue to the state from gold sales is around 480 crore per year, compared to around 100 crore each in Karnataka and Tamil Nadu.
You might also want to see this:
The state’s gold consumption is one of the highest in the country. According to the World Gold Council, India accounts for around 30% of the global demand for gold, of which Kerala is the main contributor. Three credit companies in Kerala (Muthoot Finance, Manappuram Finance and Muthoot Fincorp) together hold 47% of India’s gold in their vaults – a whopping 262.78 tonnes.