GST ON GOLD LOAN TO JEWELLARY HOUSE

[ARVIND JAIN]

Dear Expert,

Would like to know GST implication on Gold loan (Suppose 1kg of Gold ) is given by depositor to Jewellery house (duly registered under GST) and in return Jewellery house will return either 1.1 Kg of gold after one year period or 1 Kg gold and interest @ 10% on the base value transaction of 1kg gold on the date of event i.e taking possession of gold. I am clear on other aspects Such as TDS and A/c entry and GST applicability on sale by Jewellery house but Have confusion over

Q1- GST applicability on depositor transaction

Q2- Any Rbi guideline- restrictions on the above said transaction between two Individuals

Q3- If the depositor is Also registered under GST , is this transaction will be treated as Gold loan on temporary basis and okay if he receive back gold after a specified period of time or It would be treated as Supply and depositor is also liable to pay GST.

For reference you may go through one link on related subject which will help the reader of question to understand in detail.

https://www.topcafirms.com/white-paper/accounting-and-taxation-aspects-of-gold-deposit-scheme

Thanks.

AI Summary

Gold Loan Transaction: GST Implications Explored-Is It a Loan or a Supply? Expert Weighs In. A discussion on the Goods and Services Tax (GST) implications of a gold loan transaction between a depositor and a registered jewelry house. The depositor provides 1 kg of gold, expecting either 1.1 kg in return after a year or 1 kg plus 10% interest. The main queries include GST applicability on the depositor's transaction, RBI guidelines, and whether the transaction qualifies as a temporary gold loan or a supply. An expert suggests the transaction is a loan and exempt from GST, but the original poster seeks further clarification, considering potential classification as a sale under VAT law.