The GST Council is expected to finalize rules in the coming week to regulate the transportation of gold and precious stones worth ₹2 lakh or more by merchants. These rules aim to enable states to monitor the movement of these valuable items and prevent tax leakages. The proposed regulations would allow states to require GST-registered entities to report the movement of gold and precious stones worth ₹2 lakh or above, within the state, by generating e-way bills or electronic permits prior to transport.
The Federal Indirect Tax Body, during its meeting on Tuesday, will deliberate on the proposed changes to the central and state GST laws related to these rules. The suggestion to empower states with the authority to introduce such requirements was put forth by a ministerial committee headed by Kerala’s finance minister, K.N. Balagopal.
As per the expected final draft rules, if gold above the specified threshold is sold to final consumers without GST registration, the responsibility of raising the electronic permit will lie with the seller. This move to monitor the movement of gold and precious stones is a response to concerns about undocumented transactions and tax evasion in this sector. Previously, the central government had set a maximum cash acceptance limit of ₹2 lakh in a single day, with some exceptions like bank deposits, as part of efforts to formalize the economy, reduce cash usage, and establish a financial trail. Implementing the requirement of e-way bills for gold transport is also anticipated to aid in creating an audit trail, as the GST system utilizes e-way bill data to pre-fill a merchant’s sales return.
The Introduction of e-way bills for intra-state transportation of gold and precious stones is expected to help state authorities monitor the movement of these items more closely. If any shipment of these items above the prescribed threshold is detected without e-way bills, appropriate action can be taken by the authorities.
During the Council meeting, several other legislative changes will be considered, particularly those aimed at curbing tax revenue leakage in sectors prone to tax evasion, such as pan masala. Pan masala producers may be required to register their machines and capacity on the GST portal to enable better monitoring of their production. Eventually, they might be mandated to provide quick response (QR) codes on packaging, which would contain details about the factory and other relevant information.
The Council will also discuss Issuing clarifications, including regarding the tax collected at source (TCS) liability on e-commerce transactions involving multiple operators. This clarification is particularly important due to the government’s initiative called the Open Network for Digital Commerce (ONDC), which seeks to democratize digital commerce by bringing together various entities and platforms in an interoperable manner.
The 50th GST Council meeting aims to streamline the GST framework and build upon the efficiency achieved in recent months, as evidenced by the record ₹1.87 trillion in monthly tax receipts in April. Additionally, certain ministerial groups, particularly those examining the necessity of tax rate increases, may be reconstituted during the meeting.