The 5 per cent value added tax (VAT), applicable on sale of gold ornaments, is likely to be reduced.
The government has accepted in principle, the demand put forth by gold and silver merchants on this count, industry sources told The Hindu .
Five per cent VAT is applicable on sales done at outlets, which do not follow the compounding pattern of commercial sales tax remittance. The merchants conforming to the compounding tax system are liable to pay only 1.25 per cent tax. The compounding system is followed by a minority, mostly belonging to the top end of jewelleries.
