Keen numismatists and philatelists scouting for rare coins and philately materials through auctions in the country may have a long wait. For, the Archaeological Survey of India (ASI)-licensed auction houses have put on hold their auctions at least till August.
Higher GST rates imposed on antique coins and philately, and also on the commission charged for auctions, have forced auctioneers to wait for the GST rollout before deciding on future dates.
While Bengaluru saw its last auction in February this year, the next auction will not be held before August. Similarly, other auction houses, mostly in Mumbai, have put on hold their auctions indefinitely, industry sources confirmed. There are six ASI-licensed auction houses in the country that are authorised to auction rare coins.
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“Philately and numismatics have been all along seen as a hobby, which is pursued by all sections of the society. These also help save the country’s history and heritage, and making these hobbies expensive by higher taxes is not fair,” said Rajender Maru of the Marudhar Arts, an ASI-licensed Bengaluru auction house in the country. “We (auction houses) have decided to wait and watch before we decide to hold auctions. In the proposed GST rate, we do not see many participating anyway,” he said.
Mr. Maru said that since he conducted his last auctions in February, he wants to wait till at least August before deciding on the next auction. “Auctions had been put on hold because of lack of clarity on tax rate. There was a rumour that coins and stamps would fall in ‘other’ category that would attract 28% tax. However, now the category has been defined as numismatics and philately chargeable at the rate of 12%.”
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20 physical auctions
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On an average, sources said about 20 physical auctions and 12 online auctions are held in the country in a year that attract several thousands of keen bidders, and the numbers have been growing. In the recent years, collection of antique coins is also considered as part of investment portfolio as many rare coins have given good returns in about five years period, sources said.
The oldest coin in India is about 2,600 years old belonging to Gandhara Janapada (kingdom), currently in Afghanistan that was part of larger India then. While the export of antique coins are banned under the Antiquities and Art Treasures Act, 1972, it can be only traded within the country.
Meanwhile, the Indian Numismatic Association has also sought exemption from GST on antique coins that are traded, and had even sought exclusion of coins from the definition of goods.
While numismatics as a hobby helps in preservation of heritage and cultural wealth of the country, the association had also pointed out at the negligible contribution coming from numismatic trade to the treasury.
“With the increase in rate, the market for numismatic will be drastically curbed as collectors would not like to invest in numismatic coins,” it said, adding that there is a need to accord special treatment.
“As it is, the market for antique coins and philately has been down by at least 25% due to changes in rules and also the effect of demonetisation. A higher tax would keep away hobbyists from making purchases,” sources said.
Commission
On the possibility to reduce the auction house commission to attract buyers, sources said that the auction houses were already running on thin margins, and any reduction would leave them in dire straits.
Buying set to get dearer
Sourcing rare antique coins and philately materials in the country’s fledging antique auction market is set to become dearer. The cost of the hobby materials in both physical and online auction markets will be about 15% more under the GST regime.
For the first time, 12% will be levied on old bank notes that are of great collectors’ interest while the antique coins and philately materials, including stamps and first day covers, will also attract 12%. The collectors, who on an average pay about 10% to 12.5% commission to the auction houses, will have to bear 18% GST on the commission, which will all come to about 26.75% of the value of the hobby materials on the auction price.
Under the current value added tax (VAT), antique gold and silver coins attracted 1% to 1.2% (varying from State to State) while copper, aluminium and nickel coins attracted 5.5%. In all, collectors paid about 15.5% of the value of hobby materials as VAT, service tax and auction house commission.
However, a direct purchase from the licensed store would only attract 1% VAT.