Reduction In Customs Duty On Gold And Silver Brings Huge Relief to G & J Industry

Customs duty on gold and silver decreased to 7.5% from 12.5% with an addition of 2.5% AIDC (Agri Infra & Development Cess) – in effect reduced to 10% -- applauded unanimously by the whole G & J industry

Post By : IJ News Service On 01 February 2021 7:25 PM

The finance minister Nirmala Sitharaman presented the Union Budget 2021 in Parliament on February 1. The Union Budget 2021 provided a major boost to healthcare and infrastructure. However, there was no change in Income Tax slabs this year.

In her speech, the finance minister mentioned that this year's budget proposals rest on six pillars — health and well-being, physical, financial capital and infrastructure, inclusive development for aspirational India, reinvigorating human capital, innovation and R&D and minimum government and maximum governance.

Customs duty on gold and silver reduces

For many years GJC has been repeatedly following up with the government for reduction in import duty on gold, finally requests made by many G & J councils and associations have been accepted by the government. This is a major step in helping create a level playing field and controlling untoward modes of importing gold in India. “We are really happy to note that customs duty on gold has been reduced. Since the past two years we have repeatedly sent representations to the government to reduce the same and finally it has agreed. They have appointed SEBI as regulator for Gift City Gold Exchange which is also positive step. Setting up of domestic Spot Exchange for Domestic Trade is also important. We have sent many proposals to the government to simplify and easing gold monetization scheme so that a lot of gold lying in the households can be used for the good of the nation. There are a lot of synthetic stone manufacturers in India so increase in import duty is in a way protecting their interests, as jewellery manufacturers will then buy from them instead of importing synthetic stones from abroad,” explained Ashish Pethe, Chairman, GJC in response to the Union Budget 2021. In agreement Colin Shah Chairman GJEPC said, “We are thankful. We appreciate that government listened to our concerns and reduced the customs duty in gold from 12.5% to 10%.

Jewellers Association Jaipur President Sanjay Kala has welcomed the budget proposals given by Finance Minister Nirmala Sitharaman on considering jewellers’ demand of reducing basic custom duty on gold and silver. He said “This will be a step forward towards Atma Nirbhar Bharat. In this budget, we were also expecting the removal of import duty on raw material of color stones and diamond and also on import of ready colour stones from 7.5% to 2.5%.”

Helps control unlawful import of gold

Customs duty on gold and silver decreased to 7.5% from 12.5% with an addition of 2.5% AIDC (Agri Infra & Development Cess) – in effect reduced to 10%. Speaking about the Budget, Ishu Datwani, Founder, ANMOL said, “On the face of it the Budget seems to be Growth Oriented. As far as the Gem & Jewellery sector is concerned - the reduction in customs duty from 12.5% to 7.5% is a welcome move. It will be a major disincentive to smuggling.” While stating his observations about reduction in customs duty on gold, Vaibhav Saraf, Director, Aisshpra Gems and Jewels, said, “It is a very welcome and much-awaited step and will reduce gold smuggling, bring domestic gold prices closer to the international pricing, and therefore lower gold prices. Jewellers will require slightly lesser working capital in INR. This move is going to positively impact jewellers and consumers both.” 

Controlling criminal tendencies in any business is the prime duty of the government. In agreement, Snehal Choksey, Director, Shobha Shringar Jewellers added, “Reduction in customs duty by 2.5% is a very positive and welcome move by the government. This will surely enhance the sale of jewellery but most importantly it will help to reduce the illegal trade.” 

Spend on infrastructure increased 

The budget has made heavy allocations to the infrastructure segment, about which Anil Kataria, DP Jewellers, MP, said, “I think it is a very good budget. Better provisions for all – business sector and common man, it addresses issues of migrant workers, reduces burden on farmers and therefore improves changes for holistic development. Reduction in duty on gold is a positive move towards bringing in increased transparency in imports. On the whole it is a good budget and its impact will start showing in this quarter itself.” 
 

This budget ensures that the sector become smore organized in several ways and looks after the interest of the karigars and MSMEs well. Says Suvankar Sen, CEO, Senco Gold and Diamonds, “It will help the sector to be more organized. The responsibility of SEBI to manage bullion exchange implementation will help in making the gem and jewelry sector more organized. It is a good initiative by government to take care of consumers, company, and manufacturing sector, karigars as well. ”

Gold prices may reduce

Gold will once again be within reach of the middle class and lower middle class due to reduced pricing. It will lead to increased consumption of gold. Gold prices had gone up, it had become increasingly out of reach of people, hence this is a positive move. “We welcome the Government’s move to reduce the customs duty on gold from 12.5 %, after repeated recommendations from the industry year after year. This move will have a very positive impact on the industry at multiple levels. There will also be a reduction in disparity in gold pricing in India Vis-à-vis the international market helping trade in India. It will allow more and more players to become organized and bring about a sizeable reduction in black market activities in gold, stated Dr.  Saurabh Gadgil, Chairman and Managing Director,  PNG Jewellers.
 

Budget inspires positive sentiment

Overall, the budget has ensured positive sentiment by taking into account the need for support to agriculture, infrastructure, propelling digitization of our economy, reduction of tax burden on senior citizens, funding support to MSME’s and tax relief for start-ups. “The best part is that gold duty has been decreased, that is an effective way to control smuggling gold into the country. It is a good budget especially for senior citizens, they have removed taxation on pension so life for retired people has been made easier. The government’s attitude is positive for control of Coronavirus. The increase in duty on coloured stones does not actually affect the gold jewellers because the percentage of coloured stones is nominal for a jeweller as compared to the inventory stocked up by a jeweller,” notes Pankaj Seth, Durgadass Jewellers, Amritsar.
 

Notably there has been no change in IT slabs, Covid Cess has not been levied and capital gains tax has remained untouched. Leading to an extremely positive impact on the stock markets. The budget is a growth-oriented budget with very positive outcomes for our industry. “The reduction in import duty comes as a bonanza as it will lead to much increases inflow of customers into the market due to decreased prices, also the investment of a jeweller goes down to maintain same amount of stock. It is a very positive signal from the government to our industry as after a long time they have listened to our demands. Huge investments into bank, infrastructure and agriculture will lead to a much higher liquidity resulting in more spending by the consumers. The budget is favourable for the NRI’s to get money into the country and thereby benefiting the industry,” states Anand Prakash, Abhushan Jewellers, Agra.
 

IJ BUDGET HIGHLIGHTS

  • •    Customs duty on gold and silver decreased to 7.5% from 12.5% with an addition of 2.5% AIDC (Agri Infra & Development Cess) – in effect reduced to 10%
  • •    Duty on finished synthetic stones (including cubic zirconia) raised from 10% to 15%
  • •    Senior citizens above 75 years of age with only interest income will not have to file income tax returns – more disposable money made available to spend on gold 
  • •    Sound budget for infrastructure and agriculture will also have a positive outcome for G&J industry
  • •    Govt to set-up a faceless dispute resolution mechanism for small taxpayers
  • •    Govt to eliminate double tax for NRIs – more liquidity to invest on jewellery
  • •    MSME allocation to be doubled. Government to set aside Rs 15,700 crore in FY22
  • •    Revise of definition under Companies Act, 2013 for small companies by increasing their threshold for capitalization to not exceeding Rs 50 lakh to not exceeding Rs 2 crore and turnover not exceeding Rs 2 crore to not exceeding Rs 20 crore

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