GST Council meeting next week may consider e-way bill for gold transport

GST Council may take up GoM report suggesting this for intra-state transport

The Goods and Services Tax (GST) Council is likely to consider, at its meeting next week, imposing e-way bills for the movement of gold and precious stones within a state.

This is based on the recommendations of a group of ministers (GoM) headed by Kerala Finance Minister K N Balagopal, which is expected to table its report at the Council’s meetings on Tuesday and Wednesday, said government officials in the know.

The move, if approved by the Council, will help track the movement of gold and could aid in detecting tax evasion and smuggling amid rising prices of the yellow metal. Gold is viewed as a hedge against inflation and a safe-haven investment during adverse times.

The ministerial panel’s report proposes empowering states to decide on imposing the rule, rejecting the idea of introducing it for inter-state movement on the grounds of feasibility. The GoM has suggested setting a minimum threshold value of Rs 2 lakh for generating such e-way bills, leaving it to states to decide on a higher threshold. 

At present, e-way bills are compulsory for both intra-state and inter-state movement of all consignments valued over Rs 50,000, except gold.

Other suggestions

The panel has also suggested mandating e-invoicing for taxpayers supplying gold and precious stones who have an annual aggregate turnover of Rs 20 crore or more for business-to-business transactions.

The recommendations also include levying GST on a reverse-charge-mechanism basis on the purchase of old gold by registered dealers and jewellers from unregistered persons, and this may be referred to the fitment committee of the GST.

On the table

• E-way bill on gold/precious stones only for intra-state movement
• States will be allowed to decide on introducing e-way bill for gold
• Minimum threshold of gold consignment to be Rs 2 lakh
• At present, e-way bill is required for inter-state transport of goods valued over Rs 50,000, except gold
• Mandating e-invoicing for gold transactions for taxpayers with Rs 20 cr turnover
• Levy of GST on reverse charge mechanism basis on the purchase of old gold by registered jewellers

Security concerns

The report has been prepared after taking into consideration the concerns expressed by various states with respect to the security of gold and precious stones as well as of the persons carrying such consignments in case the system is implemented.

To ensure the safety of the transporters of precious metal, various measures – such as encrypting e-way bills, restricting the availability of e-way bill data to senior officers of commissioner rank and above, and not capturing the details of the transport vehicles – have been considered.

It recommends that only part A (quantity and value of goods supplied) of the e-way bill should be required to be filled without any need for filling part B (the transporter’s details).

If approved, the modalities of generating such e-way bills will be worked out by the GST Network. Once the states decide to mandate e-way bills, they have to hold consultations with the jurisdictional commissioners.

The Kerala initiative

A high-level ministerial panel was set up by the Council in 2019 to examine the feasibility of implementing e-way bills for movement of precious metals and to suggest alternative mechanisms for controlling tax evasion.

The proposal was initially mooted by Kerala, which flagged a severe decline in revenue from the sale of precious metal after the introduction of GST.

The GoM is learnt to have examined the data on revenue collection, import, export, consumption, price trends, and estimates of gold smuggling. It also deliberated on various measures for preventing revenue loss on account of tax evasion on gold and precious stones, including the requirement of generating an e-way bill, as suggested by Kerala.