India GST: A boon for UAE jewellers

Aranca, a global research, analytics and advisory firm, says gold purchases by Indian retail customers are not going to decline, however they are expected to be higher in the UAE than in India.

Sonal Bhatia, consultant, business research and advisory, Aranca, said the impact of keeping gold GST at three per cent would be a disadvantage to the Indian gold market, with retail buying in India being the highest in the world and the UAE in proximity to Indian flyers.Though the decision was made to make the Indian industries more organised and make India a favourable market for investors, it needs some settling time to let this impact fall in line with the government plans.

Bhatia said the next six months are going to be more turbulent for Indian jewellers as the industry will take some time to adapt to the three per cent GST while UAE gold is available at five per cent VAT until the next reform due in 2018. At least for these six months, the Indian gold market will be in a state of confusion regarding purchase of new gold ornaments versus exchange of old gold ornaments and subsequent making charges and taxations. On exchange of old gold ornaments, a consumer is most likely to pay three per cent GST two times - one while selling to the jeweller and second while getting the new gold in exchange for the previous.