Budget 2021: Jewellers want Centre to slash import duties and GST on gold, curb smuggling

January 21, 2021

Singapore (Jan 21)  Jewellers want reduction in import duty and GST on gold in the Union Budget 2021 to bring down smuggling of gold into the country. At present, gold attracts an import duty of 12.5% and GST of 3%.

Talking to ET, Ahammed MP, chairman, Malabar Gold & Diamonds said "The government must reduce import duty on gold and GST to 7 percent to curb large scale gold smuggling in the country, boost gold trade and strengthen consumer confidence and demand for gold jewellery. The government should create an enabling environment for the jewellery retail trade to introduce MRP pricing in jewellery without any pricing break-up in terms of GST or other taxes. MRP-based billed transactions, in a way, will make the jewellery retail trade tax-compliant and boost the government's tax collection."

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Slashing duty and GST on gold is in line with the government’s move to curb unauthorized transactions in the trade. Bringing the jewellery industry under the purview of the Prevention of Money Laundering Act is a proof of government's effective decision-making. "The trade expects similar swiftness from the concerned ministry to reduce import duty on gold.” Although the tax and duty implication is 15.5 per cent on gold,the actual implication comes to around 20 percent after adding the mining royalties. Several countries such as The United States, China, Singapore, NewZealand, Malaysia, UAE, Oman, Saudi Arabia, Qatar, Bahrain and Kuwait have eliminated import duty on gold to curb gold smuggling," said the Malabar Gold & Diamonds chief.

The gold and diamond trade together accounts for 7.5 per cent of the country's GDP and 14 percent of the country's total exports. About 60 lakh people are employed in this sector. Therefore, the government should take steps to facilitate comprehensive development of the grade trade sector so that it can continue to play a pivotal role in the growth of the economy.

“Reduced import duty will destroy the illegal gold trade spread across the country which is backed by an international smuggling lobby centered mainly in African countries. To bring in transparency in pricing, the government should set up a committee comprising government officials and members of the jewellers associations which will set the board rate. Consumers must support growth and development of the country by paying taxes. The government, the business community, all industry stakeholders and the media should collectively create awareness among the people for paying taxes," he added.

Ishu Datwani, founder, Anmol Jewellers said that apart from reduction in import duty on gold, the government should simplify paperwork and processes so that they can concentrate on increasing business and generate more employment.

"Thirdly, I wish to see some reduction in the taxes levied, so that people could have more money to spend, which in turn would give the economy the boost it needs," said Datwani

Vaibhav Sharaf, director, Aisshpra Gems & Jewels said that the financial year 2020-2021 has been a big challenge for the government. "Covid-19 exposed the failing structure of our health care system and brought tax collection to a grinding halt. With focus on increasing digital payments, improving internet connectivity and free Covid-19 vaccines, we don't expect a major relief in tax slabs for individuals or corporations in the upcoming budget. However, the government might increase spending towards improvement of public health facilities and infrastructure development, and this can increase liquidity in the markets which will boost manufacturing and retail sales alike," Sharaf added.


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