Government Must Reduce Import Duty, GST On Gold To 7%, Say Experts
Budget 2021: The government should reduce import duty on gold and goods and services tax (GST) to seven percent in order to curb the large-scale gold smuggling in the country, boost gold trade, as well as to strengthen demand for gold jewelry in the upcoming Budget 2021, stated Mr Ahammed MP, Chairman, Malabar Gold and Diamonds. The government should create a suitable environment for the jewelry retail trade to introduce maximum retail pricing in jewellery without any pricing break-up in terms of GST or other taxes. The MRP-based billed transactions, will make the jewellery retail trade tax-compliant and boost the government's tax collection, according to Mr Ahammed MP.
Presently, gold attracts 12.5 per cent import duty and three percent GST and the total duty and GST implication work out at 15.5 percent. The high taxes may result in smuggling and tax evasion. Reducing the import duty-GST implication to seven percent is an efficient measure to prevent industry malpractices. ''The government should 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,'' said Ahammed MP, Chairman, Malabar Gold and Diamonds.
The gold and diamond trade together accounts for 7.5 per cent of the country's gross domestic product and also,14 percent of the country's total exports. Meanwhile, Section 47 of the Income-Tax (I-T) Act states that any transfer of Sovereign Gold Bonds (SGBs), issued by the Reserve Bank of India, under the Sovereign Gold Bond Scheme, 2015, by way of redemption, by an assessee being an individual, should not be treated as a transfer for the purpose of capital gain.
According to research and advisory firm, Taxmann, Section 47 still refers to the gold bond issued under the 'Sovereign Gold Bond Scheme, 2015'. However, the central government issues a new sovereign gold bond scheme every year under its various series of tranches for a period of five days each. Taxmann said in its pre-budget recommendations that section 47 should be amended to remove the reference of any particular year from the sovereign gold bond scheme.