Hyderabad, 12 th January, 2021: As a part of the Union Budget 2021-22 expectations, Malabar Group Chairman MP Ahammed has urged the government that tax rate including import duty on gold and GST should be reduced to 7 per cent to curb large scale gold smuggling in the country, boost gold trade and strengthen consumer confidence and demand for gold jewellery.
Mr. Ahammed has also said that 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 GST or other taxes. MRP-based billed transactions, in a way, will make the jewellery retail trade tax-compliant and boost government’s Tax collection.
At present, gold attracts 12.5 per cent import duty and 3 per cent GST and total duty and GST implication works out at 15.5 percent. Mr. Ahammed feels that such high taxes have led to a large-scale smuggling and tax evasion. Therefore, reducing import duty-GST implication to 7 per cent is an effective measure to prevent those industry malpractices.
While elaborating his budget expectations, Mr. Ahammed said, “High import duty is the root cause of smuggling and tax evasion. The government must assess the adverse impact of higher import duty on the jewellery trade and propose duty reduction to make both trade and consumption of gold transparent. Slashing duty and GST on gold is line with the government’s move to curb unauthorized transactionsin the trade. Bringing the jewellery industry under the purview of the Anti-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, New Zealand, Malaysia, UAE, Oman, Saudi Arabia, Qatar, Bahrain and Kuwait have eliminated import duty on gold to curb gold smuggling.
The gold and diamond trade together accounts for 7.5 per cent of the country's GDP and 14 per cent of the country's total exports. About 60 lakh people are employed in this sector. Therefore, Mr. Ahammed believes 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 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” said Mr. Ahammed.