Gold jewellery retailer Malabar Group has urged the government that tax rate, including import duty on gold and GST, should be reduced to 7% to curb large-scale gold smuggling in the country. This would also boost gold trade and strengthen consumer confidence and demand for gold jewellery.
Malabar Group chairman MP Ahammed said the government should create an enabling environment for the jewellery retail trade to introduce MRP pricing in the segment 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.
"At present, gold attracts 12.5% import duty and 3% GST and total duty and GST implication work out at 15.5%. Such high taxes have led to large-scale smuggling and tax evasion. Therefore, reducing import duty-GST implication to 7 % is an effective measure to prevent those industry malpractices," he 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 in line with the government's move to curb unauthorised transactions in the trade. Bringing the jewellery industry under the purview of the Prevention of Money Laundering Act is a proof of the government's effective decision-making. The trade expects similar swiftness from the ministry concerned to reduce import duty on gold," he added.
Ahammed explained that although the tax and duty implication is 15.5% on gold, the actual implication comes to around 20% after adding the mining royalties. Several countries such as the US, China, Singapore, New Zealand, Malaysia, the UAE, Oman, Saudi Arabia, Qatar, Bahrain and Kuwait have eliminated import duty on gold to curb gold smuggling.
The gold and diamond trade together account for 7.5% of the country's GDP and 14% of the country's total exports. About 60 lakh people are employed in the sector, he added.