Mumbai: All India Gem & Jewellery Domestic Council (GJC), a national apex body for the gems & jewellery industry, has urged the Union Finance Minister Nirmala Sitharaman to withdraw the Basic Customs Duty on gold and also GST on the gems & jewellery industry.
In the pre-budget recommendation 2024-25, the apex body has submitted an exhaustive list of recommendations for the betterment of the Industry and the nation.
In 2022, the Basic Customs Duty (‘BCD’) on the import of gold is increased from 7.5% to 12.5% ad valorem. This takes the total tax incidence to 18.45% on the imported gold. This means taxation of more than Rs. 9 lac per kg. The reasons for the hike in BCD, as publicly available, seem to indicate concerns in relation to the Current Account Deficit (‘CAD’) and the impact that the import of gold has on the CAD.
Mr. Saiyam Mehra, Chairman of GJC, stated, “The jewellery industry contributes nearly 7% of India’s GDP and hence, deserves a pro-business environment. This will also benefit the Government. We urge the Finance Ministry to withdraw the increase in BCD on gold in the upcoming Union Budget and a rationalized tax structure may be developed to tackle CAD issue.
With the rising gold rate, there is an urgent need to increase the PAN card transaction limit to Rs 5 lakh from the present Rs 2 lakh.
A majority of consumers in Rural India buy Gold as an Investment for the future. They sell gold in case of a medical emergency. With the cash purchase limit of Rs 10,000 per day under the Income Tax Act, consumers cannot sell gold jewellery to meet their needs. Hence, the daily purchase limit needs to be increased to Rs 100,000 per day.
Mr. Rajesh Rokde, Vice Chairman of GJC, said, “There is an urgent need to revamp the Gold Monetisation Scheme (GMS) to attract more investment as this scheme The government must expand the number of bank branches to accept gold deposits under the GMS. Consumers in rural India consider the purchase of gold as a safe investment which is normally monetized in the urgent needs such as medical emergency or education purposes. In addition to the urban markets, the government should expand its policy benefits to the rural consumers also for the comprehensive growth of the industry. GJC has made a detailed roadmap and is willing to assist the Government in successfully implementing GMS.”
Additionally, GJC has also recommended the facility of EMI to be restored to the Gems and jewellery industry as allowed a few years ago which will lead to substantial growth of the business of the industry and also promote digital payments in the industry.
The majority of the Gems and jewellery sector falls under the MSME category and availing of loans has become a key concern for the jewellers, with the rise in gold price, it is essential to increase the limit of the collateral-free gold loan from Rs 2 crore to Rs 5 crore, which will simply help in developing the business across the nation.