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Gold consumption in India is a universal phenomenon across income classes, which explains why the GST rate on gold was fixed at just 3% and not 18%
In the run-up to the implementation of the goods and services tax (GST), the chief economic adviser to the finance ministry, Arvind Subramanian, had argued that in line with other luxury items, gold should attract an 18% GST rate. However, bowing to opposition from states and industry bodies, the final rate levied on gold turned out to be much lower at 3%.
A Mint analysis of household survey data seems to suggest that one reason why state governments may have lobbied for a low tax rate on gold is because in a country such as India, gold purchases are not an exclusive preserve of the rich. Even though the rich tend to buy more of it, possession of gold is a universal phenomenon across income classes, the Household Survey on India’s Citizen Environment & Consumer Economy (ICE 360° survey) shows.