Intra-State Supply of Gold under GST

The implementation of Goods and Service Tax had a huge effect on the gold industry. With

GST in force, the gold industry had to face an additional GST levy of 3% and the same is over and above the levy of import duty @10%. The gold price has seen its peak due to the same and it resulted in the lower demand for gold. With a view to healing the pain faced by the gold industry, the Central Board of Indirect Tax and Customs vide notification no. 26/2018- Central Tax (Rate) dated 31st December 2018, exempted the intra-state supply of gold falling under heading HSN Code 7108 when supplied by the nominated agency. The present article helps to analyze the exemption benefit as made available to the intra-state supply of gold when supplied by the nominated agency.

Available Exemption

CGST and SGST are exempted in case of intra-state supply of gold. An exemption is available only when the gold is supplied by the nominated agency to any registered person.

Conditions to be Fulfilled in Order to Avail the Exemption –

The exemption from CGST and SGST in case of intra-state supply of gold is available only and only when the nominated agency makes the supply under the scheme for ‘Export Against Supply of Nominated Agency’ of the FTP (Foreign Trade Policy).
Both the nominated agency and the recipient is required to follow the conditions and also are required to follow the procedure as specified in the Foreign Trade Policy (FTP) read with the Handbook of Procedures.
The recipient is required to export, within a period of 90 days from the date of supply, the jewellery which has been made out of such gold.
The recipient needs to provide the copy of shipping bill/bill of export containing details of GSTIN i.e. Goods and Service Tax Identification Number along with the invoice for export to the Nominated Agency. The recipient needs to submit the said documents within a period of 120 days from the date of supply by the Nominated Agency.
If the recipient fails to produce the above-mentioned proof of export, the nominated agency has to pay the amount of central tax (CGST and SGST) payable on the quantity of the gold not being exported. The central tax needs to be paid by the nominated agency along with appropriate interest from the date when the said tax on such gold supply was payable.

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Frequently Asked Questions

Common questions about Intra State Gold Supply GST Exemption Guidelines.

The exemption aims to provide relief to the gold industry, which faced additional tax burdens after GST implementation. By exempting CGST and SGST on intra-state gold supply by nominated agencies, the overall tax incidence is reduced, promoting the industry's growth.

The exemption can be availed only when the intra-state supply of gold falling under HSN Code 7108 is made by a nominated agency to any registered person, as per the conditions laid out in the Foreign Trade Policy (FTP) and the Handbook of Procedures.

The nominated agency must supply the gold under the 'Export Against Supply of Nominated Agency' scheme of the FTP. The recipient must export the jewellery made from the supplied gold within 90 days and provide proof of export to the nominated agency within 120 days.

If the recipient fails to provide the required proof of export within the stipulated time, the nominated agency must pay the CGST and SGST on the quantity of gold not exported, along with applicable interest from the date when the tax was initially payable.

The recipient must export the jewellery made from the supplied gold within a period of 90 days from the date of supply by the nominated agency.

The recipient must provide a copy of the shipping bill/bill of export containing details of their GSTIN (Goods and Service Tax Identification Number) along with the invoice for export to the nominated agency.

The recipient must submit the proof of export (shipping bill/bill of export and invoice) to the nominated agency within a period of 120 days from the date of supply by the nominated agency.

HSN Code 7108 refers to the Harmonized System of Nomenclature code for gold, including unwrought or semi-manufactured forms, or in powder form. The exemption is specifically applicable to the intra-state supply of gold falling under this HSN code.

No, the exemption is specifically for intra-state supply of gold by the nominated agency. Inter-state supply of gold by the nominated agency would still attract IGST (Integrated Goods and Services Tax).

No, the exemption is only applicable when the intra-state supply of gold is made by a nominated agency to any registered person, as per the conditions laid out in the Foreign Trade Policy and the Handbook of Procedures.