Jewellers to suffer GST pain due to inverted tax structure

Paying more tax than collected from customers may block about three-fourths of their working capital

The goods and services tax (GST) could block about three-fourths of jewellers’ working capital and impact their profitability due to an inverted duty structure. 

Simply put, jewellers will collect less tax from customers than the tax they would have paid for buying gold and converting it into jewellery. This is because of a 3 per cent tax on gold and jewellery but 18 per cent tax on making charges.

Data compiled by the apex bullion dealers body, the India Bullion and Jewellers Association (IBJA), showed that the GST structure will block 87 per cent working capital. 

“Nearly 95 per cent of jewellers do