Central Government exempts the Central Good & Service Tax (CGST) on the intrastate supply of gold by a nominated agency to any registered person.
Central Board of Indirect taxes (CBIC) clarified the exemption through notification no. 26/2018 under Central Tax (Rate) dated 31 December 2018.
The intrastate supply of gold will be exempt only when a nominated agency makes the supply under the scheme for ‘Export Against Supply of Nominated Agency’ of the Foreign Trade Policy (FTP).
The supplier, i.e. the nominated agency under the scheme mentioned above and the recipient, i.e. the registered person dealing in gold will have to follow certain conditions to get the exemption from CGST. These conditions are as follows:
1. The Nominated Agency and the recipient shall follow the terms and comply with the procedures as specified in the handbook of procedures of FTP;
2. The recipient will be required to export the jewellery made out of such gold within a period of 90 days from the date of the supply and shall provide a copy of the shipping bill along with the invoice for the exports to the nominated agency within a period of 120 days from the date of supply by such nominated agency.
3. If the proof of export is not produced within the specified period (as mentioned in point 2) then the nominated agency, i.e. the supplier, will have to pay the amount of CGST on the quantity of gold not exported and had claimed exemption on the same, along with interest from the date when the said tax on such supply was payable.