Isaac flags steep fall in GST on gold
Finance Minister T.M. Thomas Isaac on Wednesday told the Assembly that the government would constitute a special team to build a strong case against businesses that dodge tax on gold.
Capping the discussions on demands for grants in the Budget for Goods and Services Tax (GST), Sales Tax and Agricultural Income Tax, Dr. Isaac said the public exchequer had registered a steep fall in GST on gold.
When Value Added Tax (VAT) was the norm, the government had earned ₹630 crore as tax on gold jewellery. With the advent of GST, gold tax collection had fallen to ₹272 crore.
The government could not accept the massive tax evasion. It would constitute a team of revenue enforcers, including IRS officials, to dismantle the racket. If required, the team would conduct surprise inspections, raids and slap criminal charges on violators.
The government’s move comes against the backdrop of the Directorate of Revenue Intelligence’s recent assertion in court filings that gold smuggling had reached alarming proportions in Kerala, and the racket generated copious amounts of black money, which could be channelled for anti-national activities.
The Central Bureau of Investigation (CBI) had also booked at least two Customs officials in Thiruvananthapuram and Kochi recently on the charge of having abetted large scale smuggling of gold through the respective airports. However, the end beneficiaries of the racket remained elusive.
The Customs Department had flagged up that the legal sale of bullion had plummeted due to the influx of contraband gold from the Gulf. The tax differential was huge, an estimated ₹3.5 lakh a kg, making smuggling bullion into India from abroad lucrative. The Centre had in 2014 upped the tax on gold to address the country’s worrying current account deficit.
Dr. Isaac said the government would use the Chief Minister’s Disaster Relief Fund to repair the Alappuzha-Changanassery and Wayanad-Thurankam roads, which were severely damaged in the catastrophic floods that inundated Kerala in August last. The one per cent flood cess would not trigger a price rise. The House passed the demand by vote.