Question

The VAT rate for gold, silver, other precious metals, semi-precious stones and their jewellery is
A. 1%
B. 4%
C. 12.5%
D. 15%

Answer 1

Hint: There are many types of tax and one of them is VAT. And VAT percentage is different on different types of products. It mainly depends on the cost and the value of importance of that product but is fixed for the same set of products.

Complete step-by-step answer:
As we know that VAT stands for Value Added Tax
And VAT is a type of tax also known as consumption tax that is levied on the price of the product or services at each stage of the production or supply chain. Like sales and distribution till the end when it reaches the customer.
And there are different types of VAT because it depends on cost and importance of the product. So, it will be different for different products. Like,
General VAT rate – It is imposed by different state governments on products which are harmful for consumption and not necessary like liquor and cigarettes. So, VAT is charged higher in this type of product and it will be around 10% - 20% on the cost of the product.
4% - 5% VAT rate – This type of VAT is applied on daily consumption goods like oil, medicines, coffee and other daily consumption goods are also placed in this category by various state governments. And as the name suggests VAT is charged around 4-5 % of the cost of the product.
1% VAT rate – This type of VAT is charged mainly on expensive items and the VAT percent should be low otherwise the amount of the product will become too high after applying VAT. Gold, Silver, other precious metals, semi-precious stones and their jewellery fall under this category of goods. And most of the Indian states have fixed VAT for these items at 1% of the amount.
Nil VAT rate – Some items are basic in nature and not much supply chain is involved because they are mostly sold by unorganized sector or in natural form. So, that type of items like salt, khadi etc are sold without levying any VAT on them.
So, the VAT rate for Gold, Silver, other precious metals, semi-precious stones and jewellery will be 1%.
Hence, the correct option must be A.
Note:- We should know that VAT is simply measured as a difference between input tax and output tax Where output tax is the tax collected by the seller for the selling of his goods and services and input tax is the tax payable by the seller for the raw materials used to produce his goods and services.