New Delhi - Banks will have to pay 3% Integrated Goods and Services Tax (IGST) on imports of gold and silver, which can be claimed as input tax credit, the Central Board of Excise and Customs (CBEC) said.
"Yes, 3% IGST is payable on all imports of precious metals in addition to the basic customs duty. IGST paid can be taken as input tax credit by the banks," CBEC said in a set of Frequently Asked Questions (FAQs).
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, it said.
The 3% IGST is payable with effect from July 1, the day of implementation of the new indirect tax regime.
CBEC said that the GST is payable at the rate of 3% of the total transaction value of jewellery, whether the making charge is shown separately or not.
Under the new GST regime, apart from the 3% IGST, a basic customs duty of 10 per cent is payable on gold imports.
Replying to a FAQ on the GST treatment when the gold is issued as raw material to a job worker and returned as finished goods, CBEC said that the job worker, if registered, would be required to pay GST at the rate of 5% on job charges.
"The jewellery manufacturer would in turn take credit of GST paid on such job work and may utilise the same for payment of GST on his sales of manufactured jewelry. However, if the job worker is exempted from registration, the jewelry manufacturer would be required to pay GST on his input supply from the job worker (of jewelry made out of precious metal given by him) on reverse charge basis," CBEC stated.
Nonetheless, he would be eligible to avail input credit of the tax so paid under the reverse charge mechanism, it added.