The All India Gem and Jewellery Domestic Council (GJC) has sought an immediate reduction in import duty on gold which now stands at 12.5%.
India’s trade deficit narrowed to 2.5% of GDP in 2019 and over the past, Union commerce ministry has also many times suggested to reduce the gold custom duty to save the predominantly hand crafted and labour intensive small and medium businesses. Over 1 crore skilled labour force is engaged in manufacturing of jewellery in the domestic sector have been fighting for survival and many have left the profession due to multiple challenges and headwinds, a release issued by GJC on Thursday said.
As part of their pre-budget recommendations, GJC has sought that all government schemes for MSMEs should be implemented and applicable to the indigenous gem & jewellery sector, which is prominently represented by small and medium scale jewellers. GJC urged the Government to extend the benefit of reduced Income tax rate to even Partnership (Including LLP) or Proprietorship firms. The tax rate for Body Corporate with annual revenue of less than Rs. 250 crore a year was reduced to 25% from 30% in the last Budget. A majority of the players in the gems & jewellery Industry are either partnership (Including LLP) or proprietorship firms.
Mr. Anantha Padmanaban, chairman, GJC, said, “GJC has actively represented various concerns of the Industry to the Govt. We are positive with the Union Budget 2020-21, wherein the Govt should announce immediate reliefs and initiatives to boost the Jewellery sector, which has witnessed slowdown across India post increase in Custom Duty. We have always supported Hallmarking, as it will bring transparency and credibility in the Jewellery industry. However, it is also essential to keep Gems & Jewellery Industry in confidence in all aspects of Hallmarking.
Mr. Shaankar Sen, Vice Chairman, GJC, said, “The high import duty on Gold has increased socio-economic menace in the country in the form of smuggling of alarming proportions and the re-emergence of unorganized/illegal channels for procuring gold. Gold is our basic raw material and GJC is totally committed to help the Government unlock 22,000 tonnes of gold in India households through a Gold Monetization Scheme. GJC is committed to offering its counsel and intelligence to Bankers to ensure that genuine organized jewellers get bank finances and benefits that are applicable to other MSMEs.”
Gold Monetization Scheme (GMS), which was reintroduced by Honourable Prime Minister in 2015, has collected just 11.1 tonnes. The idea was to turn gold holdings into an earning asset by allowing residents to deposit physical gold bars, coins or jewellery into a Gold Savings Account. To ensure the Gold Monetization Scheme is effective implementation and success of GMS, it is imperative to involve Jewellers as well. In 2018, GJC had submitted a detailed roadmap of revised Gold Monetization Scheme (GMS) and hopeful for implementation by the Government, as this will curtail the Gold imports to a large extent.
GJC also recommended raising PAN card limit from Rs. 2 lakh to Rs. 5 lakh. Every household purchases gold during weddings and is also considered as a ‘Stree Dhan’. Since almost 60% of the Gold Jewellery sales takes place in rural sector, where the income source is majorly from agriculture. In such cases, as the income falls under non taxability, the customers does not possess PAN card. Moreover, we have witnessed substantial increase in gold price over couple of years. Gold is also viewed as a safe, secure and a time-tested investment.
GJC has urged that the facility of EMI should be extended to the Gems & Jewellery industry which in turn shall lead to substantial growth of the business of the industry and therefore propel the growth of the economy. Currently, loans on purchase of jewellery is being treated as Personal Loans, where the rate of interest is very high. EMI should be available for purchase of jewellery and restriction should continue only for bullion and coins. This will help the industry promote Honourable PM’s vision of Digital India.
Most of the people in Rural India prefer Gold as an Investment and have their savings in the form of Gold. In case of Medical / financial emergencies they approach the jeweller to liquidate their savings or investment. But due to provisions contained in Section 40A of the Income tax Act, a jeweller is unable to make payment above Rs. 10,000/- in cash. Keeping in mind the hardships faced by the common man during crisis, GJC urged that the limit of Rs. 10,000/- per day be increased to Rs. 1,00,000/- per day. At present, the monetary limit on revenue expenditure or purchase limit in cash is Rs. 10,000 per day.
GJC requested the Government that in case jewellery sold is reinvested in new jewellery, the exemption from Capital Gain as per Section 54F of the Income Tax Act 1961 should be extended to G&J Industry. This will help the industry to move towards organized and compliant business practices. In case of remaking of new jewellery from old jewellery or old gold, GST is applicable @18% on labour charges. Due to high rate of GST, the customers are reluctant to go for this option. The other option left with customer is to sell the old jewellery and buy new jewellery. However, as there is Capital Gains Tax involved, customers are hesitant for this option.
In order to promote manufacturing in this sector and support ‘Make in India’ initiative of Government of India, jewellery manufacturing machines import duty should be 0%.
Source: Economic Times