Indian online digital wallet and retail system Paytm says it has sold more than 100 kilograms of gold on its platform and is now in discussions with jewellers across the country to enable buyers to redeem their digital gold in the form of jewellery.
Daily jewellery sales in India declined by 70 percent on Monday, the first full day after the roll-out of the country's new Goods and Services Tax (GST), according to Nitin Khandelwal, Chairman of the All India Gem & Jewellery Trade Federation (GJF).
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According to Khandelwal, consumers bought heavily in the week before GST roll-out. According to some estimates, this buying was as much as 50 percent above normal.
Previously, based on turnovers, Indian jewellers either came under the ambit of a 1.2 percent Value Added Tax (VAT) and had to pay another one percent in Excise Duty. Smaller operations were exempted from VAT but had to pay the one percent Excise Duty. Now, jewellery across the turnover spectrum will have to pay a 3 percent GST.
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Primary gold has become more expensive by up to 2 percent after the rollout of GST, and this has had a dampening effect on consumers purchases for now at least. Additionally, services such as the buy-back of scrap jewellery now attract a 5 percent GST on the job-work required to convert it to new product.
The pause in jewellery buying combined with a fall in international gold prices has pushed primary gold prices in India down.
