1. Impact on Jewellery Sector
Goods & Service Tax
Impact on Jewellery Sector
By CA Ranjan Mehta

2. Introduction
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3. GST – Why so much buzz
Biggest Indirect Tax reform since independence impacting each transaction
Significant change in Tax administration system
Impacting all Stakeholders – Business, Government, Consumer
Will make indirect tax environment more simple, stable and predictable
Applicable from 1st July 2017
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4. Fact about GST in World Economy
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5. Impact of GST on Jewellery Sector
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6. Major Changes Supply based Tax Destination based Consumption Tax
Advance Received Taxable
Matching of Input Tax Credit
37 Returns for each Registration
State Wise Registration
Reverse Charge
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7. Current Tax Structure Tax Tax Rate (Amount) VAT – Composition
Rs per Rs. 2 Lakhs
VAT
1% (Without Composition Scheme)
Excise
1% (Without CENVAT)
10% (With CENVAT)
CST 1%
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8. Transactions
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9. Rates Approved by GST Council
Export (Zero Rated)
Rough Diamond and other Stones
Precious Metals & Articles thereof and Imitation Jewellery
Job work related to Jewellery
Moonga (Coral)
0.25 3 5
5/28
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10. Exchange of Old Ornaments
New Jewellery A B
Jeweller
Customer (Unregistered)
Old Jewellery/ Gold
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11. Definition of Business
(17) “business” includes––
(a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit;
(b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a);
(c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction;
(d) supply or acquisition of goods including capital goods and services in connection with commencement or closure of business;
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12. Reverse Charge
Sec 9(4) The central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.
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13. Supply of Gold for making new ornaments
New Jewellery Making Charges only A B
Jeweller
Customer (Unregistered)
Gold
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14. Definition of Job Work
(68) “job work” means any treatment or process undertaken by a person on goods belonging to another registered person and the expression “job worker” shall be construed accordingly;
Notification No. 11/2017 – Entry No. 26
(i) Services by way of job work in relation to-
(c) Cut and polished diamonds; precious and semi-precious stones; or plain and studded jewellery of gold and other precious metals, falling under Chapter 71 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975);
Classification of Service
Heading no : Manufacturing services on physical inputs (goods) owned by others
: Jewellery manufacturing services
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15. Supply of Gold for making new ornaments
New Jewellery including some diamonds and other stones from own stock
Charge : Making Charges + Price of Diamonds and Stones A B
Jeweller
Customer (Unregistered)
Gold
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16. Customer (Registered)
Wastage
New Jewellery
Waste – 2% A B
Jeweller
Customer (Registered)
Old Jewellery/ Gold
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17. Customer (Registered)
Wastage
Waste – 2%
Charged to
Customer -4%
New Jewellery A B
Jeweller
Customer (Registered)
Old Jewellery/ Gold
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18. Supply of Jewellery to Job Worker
Registered?
Unregistered?
Composition?
Gold A B
Jeweller
Job Worker (Karigar)
Jewellery
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19. Supply of Jewellery to Job Worker
Registered?
Unregistered?
Composition?
Gold A B
Jeweller
Job Worker (Karigar)
Includes other Alloys
Jewellery
Charges : Making Charges + Alloys
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20. Supply of Jewellery to Job Worker
Registered?
Unregistered?
Composition?
Gold A B
Jeweller
Job Worker (Karigar)
Jewellery
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21. Goods Given to Agents and BrokersC
Supplier
Recipient A
Broker/
Commission Agent
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22. Provisions related to Sale on Approval
Sec 31(7) Notwithstanding anything contained in sub-section (1), where the goods being sent or taken on approval for sale or return are removed before the supply takes place, the invoice shall be issued before or at the time of supply or six months from the date of removal, whichever is earlier.
Sec 2(5) “agent” means a person, including a factor, broker, commission agent, arhatia, del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of supply or receipt of goods or services or both on behalf of another;
Sec 24 (vii) persons who make taxable supply of goods or services or both on behalf of other taxable persons whether as an agent or otherwise;
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23. Goods Given to Agents and BrokersC
Supplier (U.P)
Recipient (Punjab) A
Broker/
Commission Agent
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24. Goods Given to Agents and BrokersC
Supplier (Rajasthan)
Recipient (Punjab)
Recipient (Haryana) A
Recipient (Delhi) D
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25. Transition
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26. Credits during transition
Availability
VAT 1%
Available
Central Excise 10%
VAT 0.5% Composition
Not Available
Central Excise 1%
Deemed Credit
To traders only and to the extent of CGST only – 40%
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27. Tax payable when and by whom Applicability of the exemption
Inputs removed for Job work and returned on or after the appointed day – Sec 141(1)
Tax not payable when
Goods were removed/ dispatched as such or after partial processing for job work under the existing law prior to appointed day;
Such goods are returned within six months or within the extended period (2 months) from the appointed day to the said place of business
Tax payable when and by whom
Goods are liable for payment of taxes under GST; and
Such goods are returned after 6 months or within the extended period from the appointed day
If goods are not returned within 6 months or extended period, input tax credit availed in respect of inputs removed will be recovered from the sender
Applicability of the exemption
Manufacturer (under CGST Act ) / person dispatching the goods (under UTGST Act) and job worker should declare details of inputs held in stock by the job worker on behalf of the sender on the appointed day
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28. Credit of eligible duties and taxes on inputs / input services during transit – Sec 140(5)
CGST
A registered person is entitled to take credit in electronic credit ledger of eligible duties and taxes on inputs / input services received on / after the appointed day but the duty / tax has been paid by the supplier under the existing law
Condition: Invoice / any other duty / tax paying document recorded in the books of accounts within 30 days from the appointed day
SGST
A registered taxable person shall be entitled to take credit in his electronic credit ledger of VAT and Entry tax on inputs received on / after the appointed day but tax has been paid by the supplier under the existing law
Condition: Invoice / other tax paying document recorded in the books of accounts within 30 days from the appointed day
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29. Exports Exports are ZERO RATED as per sec 16 of IGST Act.
Bond/LUT may be taken for exports without payment of Integrated Tax.
Consignment Exports?
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30. How should an ideal taxation law look like?
What is Expected
Yes or No
1 Nation 1 Tax Rate ?
Goods or services are not required to be segregated
Provides adequate time and support for transition
Does not lead to major changes in business process & systems
Should not Increase Business Cost
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31. GST in Hand ! GST We Thought About ! One Nation Two Authorities
One Nation One Tax
Three Taxes
Four Rates
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32. THANK YOU !!! Ranjan Mehta & Associates Jaipur :
S-15, Krishna Mall, Lakshmi Mandir Tiraha, Tonk Road, Jaipur
Tel
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