Bengaluru: As part of the Union Budget 2021-22 expectations, Malabar Group Chairman M.P. Ahammed has urged the Government that tax rate including import duty on gold and GST should be reduced to 7 percent to curb large scale gold smuggling in the country, boost gold trade and strengthen consumer confidence and demand for gold jewellery.

In a press release, Ahammed has also said that the Government should create an enabling environment for the jewellery retail trade to introduce MRP pricing in jewellery 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 Government’s tax collection.

At present, gold attracts 12.5 percent import duty and 3 percent GST and total duty and GST implication works out at 15.5 percent.  Ahammed felt that such high taxes have led to a large-scale smuggling and tax evasion. Therefore, reducing import duty-GST implication to 7 percent is an effective measure to prevent those industry malpractices.

Although the tax and duty implication is 15.5 per cent on gold, the actual implication comes to around 20 percent after adding the mining royalties. Several countries such as the United States, China, Singapore, New Zealand, Malaysia, UAE, Oman, Saudi Arabia, Qatar, Bahrain and Kuwait have eliminated import duty on gold to curb gold smuggling.

The gold and diamond trade together accounts for 7.5 percent of the country’s GDP and 14 percent of the country’s total exports. About 60 lakh people are employed in this sector. Therefore, the Government should take steps to facilitate comprehensive development of the grade trade sector so that it can continue to play a pivotal role in the growth of the economy, Ahammed said.