GST impact: Gold importers, exporters to face many operational issues

The financial cost of importing gold and diamond is set to increase on account of Integrated Goods and Service Tax (IGST), as importers' capital is likely to be blocked until refund comes. Even as exporters propose to raise bank guarantees to avoid refund complexities, domestic bullion traders, as well as importers and exporters of gold are expected to face several operational issues when GST is implemented from July 1.  Commodity Trading Tips

The bullion industry is generally happy with the three per cent GST rate applicable on gold, but it remains worried about the operational difficulties of doing business. Industry players have made representations on this to the finance ministry and, “we were assured that such operational issues would be addressed at the GST council meeting next week,” said an industry representative. Nifty Trading Tips

In case of imports, the agency -- a bank or a nominated one -- has to pay IGST of three per cent for bringing gold into the country. When it sells the imported gold to a dealer or a jeweller in the domestic market, it has to apply for a refund, which usually takes long to come. This will increase the cost of operation. On any transfer among branches, IGST would have to be paid and one could recover this from the customer only at the time of sale. “Working capital required for conducting gold business will increase,” says Shekhar Bhandari, senior executive vice-president and business head, global transactions, Kotak Mahindra Bank. Future & Option Trading Tips