Kerala to intoduce e-way bill for gold to curb tax evasion in the offing

Kerala may become the first state to implement such a bill, with gold consignments above Rs 2 lakh falling under its scope.
Representative image
Representative image

KOCHI: Kerala is expected to introduce an e-way bill for gold in the near future in an effort to curb tax evasion. A ministerial panel, led by Kerala Finance Minister K N Balagopal, recommended this measure at the recent GST council meeting. The panel also suggested mandatory e-invoicing for B2B transactions by all taxpayers supplying gold and precious stones with an annual aggregate turnover above Rs 20 crore.

The finance minister also met stakeholders in the state to discuss the implementation and the related concerns. Kerala may become the first state to implement such a bill, with gold consignments above Rs 2 lakh falling under its scope.

According to estimates from the World Gold Council (WGC), Kerala likely has the highest per capita gold consumption in India, with an annual consumption of 200-225 tonnes. Despite the thriving industry, the state struggles to efficiently collect taxes on gold jewellery, leading to concerns about potential revenue loss. Experts note that Kerala’s annual tax revenue from the gold jewellery trade is less than Rs 600-1,000 crore, a modest figure given the state’s consumption levels.

Gold jewellery makers and retailers are wary of the government’s move to enforce the e-way bill. Traders argue that it is impractical for a trade that requires discretion. Small manufacturers who practice the trade as a household industry find compliance with the e-way bill for every movement of gold cumbersome.

A K Sabu, general secretary of the Jewellery Manufacturers Association (Kerala), told TNIE that implementing the bill in its current format could devastate individual and small jewellery makers who operate informally from their homes.

“We have to take the gold to several places for work like dye-cutting, polishing, colouring, and hallmarking during the manufacturing process. It is not practical for us to file an e-way bill every time. For individual and very small jewellery makers, this move would be catastrophic,” Sabu said.

He pointed out that there are more than three lakh goldsmiths in the state who still craft intricate handmade ornaments and specialise in lightweight jewellery.

“The bill would only benefit large players with dedicated administrative staff,” he said.

S Abdul Nassar, treasurer of the All Kerala Gold and Silver Merchants Association, argued that there is no evasion or leakage and that the new move will only destabilise the sector.

“When a married woman can hold or carry 500gm of gold jewellery in India, how can the movement of gold worth Rs 2 lakh be effectively implemented? This will only lead to undue harassment by GST officials. We have requested that the norm be changed to volume, making it mandatory only for gold above 500 grams,” he said.

A senior official with the state GST department acknowledged that job work undertaken by goldsmiths could be hampered but suggested that a middle ground could be found by increasing the limit of gold transported so that small players are not harmed. He noted that tax collected from jewellery retailers does not reflect reality, pointing to the disparity between escalating gold prices and the collected taxes.

“Introducing e-way bills can help in better tax collection and provide better documentation that can be cross-checked with suppliers and retailers. This is the only way to ensure compliance and higher collection,” he said, emphasising that current methods to detect tax evasion rely mainly on chance discoveries or information-based detection.

GOLD iS GOLD

  • Rs 343.81 cr - State GST collected from gold retailers in 2021-22

  • Rs 383 cr - State GST collected from gold retailers in 2022-23 (till October)

  • Rs 1,01,688.96 cr - Total turnover of retailers, as per returns submitted in FY22

*Source-RTI and All Kerala Gold and Silver Merchants Association

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