Dubai: For India’s legions of gold consumers — second only to the Chinese — the new GST (goods and service tax) will do nothing to reduce their appetite for the metal. In fact, in states such as Kerala — home to some of the most passionate accumulators of the asset — the new tax regime actually reduces the cost of buying.

But expat Indians in the Gulf states have no reason to give more than a cursory glance to India’s GST roll-out. They retain the 10 per cent plus advantage buying gold from here rather than somewhere in India … at least until early January (when VAT comes into effect in the Gulf states.) But for Indian jewellery retailers, especially those with sizeable store networks, the GST is the best thing to have happened. “So much of gold buying in India was done through small retailers and sales were never recorded properly on their books,” said Joy Alukkas, chairman of the retail chain that bears his name. “When you had those levels of under-invoicing — even no reporting — it was detrimental to those retailers following the rules. And the tax authorities were losing money all the way.

“Even when they tried to bring more jewellers into the tax net — through the compounding taxation method followed in Kerala — the results were patchy. And always the big retailers were left with a disadvantage because they would do things by the book.

“The GST will belatedly bring about transparency in the gold and jewellery retail sector.” (Earlier, India’s move on demonetisation — where older currency was pulled out and replaced with higher denomination currency — had dealt a stinging blow to all-cash “off-the-book’ gold buying.) Market sources insist that consumers who prefer all their transactions to be above board will have no reason to worry about the GST on gold. “The net raise in taxation is only 1 per cent,” said Darshan Shah of N. Gopaldas Jewellery. “In some states, there will a drop of taxation by 1 per cent as their VAT is lower.

“Considering the overall industry standards across the world, the GST is very low. The higher volume of consumption justifies this. End consumers are not affected.”

For those jewellery retailers with a presence across multiple states, GST simplifies much of their tax payment processes. No longer will they have to bother with different states having their own sales tax measurements.

“We had so many taxations across different states,” said Shah. “The movement of goods across states was always a challenge. With a single tax structure, the barriers for interstate trade have been removed.

“Considering the vastness of the Indian market, the scale of the gold industry — covering everything from manufacturing to retail — the GST launch might have its initial challenges. But it will be a much-awaited wish fulfilment for the industry.”