Gems, jewellery industry seeks reduction of import duty in Budget

The gem and jewellery industry has sought reduction in customs duty on gold to four per cent, withdrawal of tax collected at source (TCS), cut in import duty on polished precious and semi-precious gemstones, in the upcoming Union Budget 2021-22.

All India Gem and Jewellery Domestic Council (GJC) Chairman Ashish Pethe told PTI, "We urge the government to reduce the customs duty to 4 per cent from the current 12.5 per cent. If the tax rate is not kept at this level, it will encourage smuggling and encourage people to do unorganised business."

He further urged the government to keep goods falling under HSN-71 (Harmonised System Nomenclature) out of the purview of TCS provisions as the amount of funds blocked in TCS is 6.67 times more than the ability to pay income tax, resulting in blockage of funds.

Pethe also said the facility of equated-montly instalment (EMI) should be extended to the gems and jewellery industry and to increase the cash purchase limit to Rs 1 lakh from the current Rs 10,000.

Gems and Jewellery Export Promotion Council (GJEPC)Chairman Colin Shah urged the government to reduce import duty on cut and polished precious and semi-precious gemstones to 2.5 per cent, from the current 7.5 per cent.

In its Budget recommendations, GJEPC has also proposed a hike in import duty on synthetic cut and polished stones to 25 per cent from 5 per cent.

Shah said GJEPC has also proposed amendment in taxation provisions to allow sale of rough diamonds in special notified zone in Mumbai.

Malabar Group Chairman MP Ahammed has urged the government thattax rate, including import duty on gold and GST, should be reduced to 7 per cent.

Ahammed has also said 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.

Currently, gold attracts 12.5 per cent import duty and 3 per cent GST and total duty and GST implication works out at 15.5 per cent.

"Such high taxes have led to 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," he added.

Although the tax and duty implication is 15.5 per cent on gold, the actual implication comes to around 20 per cent after adding the mining royalties.

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, Ahammed noted that 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.

PNG Jewellers Chairman and Managing Director Saurabh Gadgil opined that 2020-21 has had a negative impact on the industry over all.

"While jewellers are on track to recover from the impact of the pandemic and a muted wedding season, we are hopeful that the Budget 2021-22 will look at the jewellery industry favourably and roll out many SOPs and important policy changes that can help revive the industry in the next one year," he said.

It is critical that the government also look at policies that encourage banks to kick-start lending once again to the jewellery sector, which will help businesses across the board to maintain liquidity and ensure survival and success, he pointed out.

From the consumer perspective, he said gold should be deemed as an asset class like the mutual funds, allowing an increase in consumer investment confidence as well as the availability of facilities like EMI schemes to invest in gold products.

"Setting up of a spot exchange, announced in the 2018 Budget on an immediate basis, will ensure consistency in pricing of gold across the country. This will boost consumer confidence and help people sell their gold at daily transparent prices," he added.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel