Governments of Telangana and Andhra Pradesh had identified that most jewellers and gold traders are the biggest culprits of Tax evasion as they hide a lot of transactions. They are supposed to pay a 1 per cent value added tax (VAT) to the Commercial Tax department for sales of solid gold or jewellery form. However majority of the traders do not do that.
The 1% VAT is not a big deal for them the sales tax, income tax, and import duty questions that will arise once VAT is paid is a headache. And then there arises a need to declare the source of the gold purchased which will totally mount the problems. Hence the states are losing amounts of several crores.
Telangana Tax sleuths are already cracking down on tax evasions by bullion traders in the state. They have cautioned traders to comply with rules to avoid random raids and checks. Tax evasions like these attract huge penalties, up to 20 per cent of the total gold value, besides sales tax and VAT.
