New Delhi: The sale of old jewellery, whether for the purposes of buying new jewellery or not, will attract GST, the revenue secretary of the central government, Dr. Hasmukh Adhia has clarified. He was speaking at ‘GST ki Master Class’, a series of sessions broadcast live on government TV and radio channels, where a team of experts clarified issues relating to the new tax regime.

Dr. Adhia said that while direct sale would attract a 3% GST levy on the value, the amount would be deducted from the GST payable by the customer if he purchased new jewellery. Jewellers may also claim the amount as input tax credit if the gold is used for jewellery sold later to other customers.

He said that if old jewellery is given to the jeweller for modification, then this would be categorised as job work and a 5% GST on making charges would be payable.

Scrap gold, the industry term for recycled gold, has contributed a small, but not insignificant amount to the gold used in jewellery manufacturing in India each year. Last year, World Gold Council estimated that 89.6 tonnes of gold was recycled, a 12% increase over the 80.2 tonnes in 2015. Traditionally, high gold prices lead to a spurt in recycling.

Reports in sections of the media also indicate that the West Bengal government may be considering exemption from state goods and services tax (SGST) for the gems and jewellery industry. The reports say that the waiver would be a continuation of the exemption from Value Added Tax (VAT) that the industry enjoyed in the state earlier.

However, government officials quoted in the report did not reveal any timeline for the implementation. Various industry associations have welcomed the possible waiver, saying it would benefit micro, small and medium enterprises (MSMEs) which constitute the vast majority of companies in the gem and jewellery manufacturing sector.