Siddaramaiah bats for common man, demands VAT cut on gold

The escalating price of gold raised concerns in the state assembly too on Wednesday as leader of the opposition Siddaramaiah vehemently argued against the proposed hike in Value Added Tax (VAT) from 1% to 2%.

“The price of gold has shot up to Rs21,000 per 10gms. This steep hike in price itself will ensure higher tax collection from gold and jewellery. So there is no need to double the VAT. Further rise in tax on gold will further raise its price. The poor and middle class people are already finding it difficult to get their daughters married,” Siddaramaiah said demanding that chief minister BS Yeddyurappa  drop the VAT hike proposal on gold.

Any increase in tax on gold would also lead to people buying jewellery from neighbouring Tamil Nadu where the tax is 1%, Siddaramaiah added. Chief minister BS Yeddyurappa rejected the demand, saying that Kerala has imposed VAT of 4% on gold, so Karnataka’s 2% could not prove so burdensome.

“We have to mobilise the resources for so many development programmes. So it is inevitable to tax the rich. Of late, buying gold as an investment option is also on the rise among the upper classes of the society. It is also a fact that about 70% of the jewellery transactions are happening without proper billing. I have taken all these aspects into consideration while deciding to increase VAT on gold,” Yeddyurappa said.

The house later passed the Karnataka VAT bill enabling the state government to raise VAT on gold and jewellery. It also proposes to raise VAT on several consumer goods like fridges, fans and other consumer goods from 13.5% to 14%.