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Banks importing gold and precious metals will have to pay 3 per cent tax under goods and services tax (GST), which can be claimed as input tax credit, the government has said. Clarifying issues on GST on gems and jewellery through frequently asked questions (FAQs), the Central Board of Excise and Customs (CBEC) said banks did not pay any VAT (value-added tax) on an import of precious metals previously. They only paid customs duty. However, under GST, "3 per cent Integrated-GST is payable on all imports of precious metals in addition to the basic customs duty. IGST (Integrated GST) paid can be taken as input tax credit by the banks." It also said banks would be liable to pay IGST on such imports and not any overseas supplier in which ownership is vested during movement of gold or silver. "Ownership is not material for determining whether an import has taken place.
Banks, being registered entities, would be liable to pay IGST on such imports but not the overseas entities since they are not effecting the import," the FAQ said. Import of gold attracts a 10 per cent basic customs duty. On top of that, a 12.5 per cent countervailing duty (CVD) was levied prior to GST. Since GST subsumed CVD, hence the GST rate on gold at 3 per cent has to be paid at the time of imports in the form of IGST with effect from July 1. The CBEC also clarified on levy of GST where the total value of a gold ornament is Rs 30,000, including Rs 2,000 as making charge saying, "GST is payable at the rate of 3 per cent of the total transaction value of jewellery, whether the making charge is shown separately or not".