Both large and small jewellers in Kerala have reported loss of business of about 25-30 per cent on an average per annum due to illegal gold trade and the usage of price arbitrage card. They claimed that the 13 per cent duty on gold- 10 per cent import duty and 3 per cent GST- is encouraging illegal entry of the yellow metal.
Ahammed MP, chairman, Malabar Gold & Diamonds, said it is no trade secret that the gold trade never hit a purple patch ever since the transformational GST kicked in on July 1, 2017. “While one-country, one-tax is an idea whose time has come, the maze of taxes has left enough space for unbridled and illegal shipment and sale of gold and gold ornaments in the domestic tariff area, distorting prices and upsetting the plans of legally run businesses. A back-of-the-envelope estimate shows that both single shop and large gold retail chains like us are losing business to the tune of 25-30 per cent on the average per annum as the illegal trade is chipping away at our business, playing the price arbitrage card,” he said.
He further said that for the first time, Kerala finance minister Thomas Isaac has come out with some numbers on revenue loss to the exchequer stemming from tax evasion post-GST rollout recently in the state assembly. According to him, while the tax revenue to state exchequer pre-GST (VAT) from the segment averaged ₹638 crore per annum, it has tanked to an average of ₹272 crore after the GST rollout. “The numbers are indeed revealing and shocking,” said Isaac.
Surendra Mehta, national secretary, India Bullion & Jewellers Association, said the entry of illegal gold can only be tracked by reducing the import duty on gold in a phased manner. “It is now at 10 per cent, but it should be reduced by 1-2 per cent periodically,” said Mehta.