The gem and jewellery industry has a lot expectation from the Modi government in the upcoming Union Budget 2021-22. The industry wants the Centre to reduce customs duty on gold, withdraw of tax collected at source (TCS), cut in import duty on polished precious and semi-precious gemstones.
According to Ashish Pethe, the chairman of All India Gem and Jewellery Domestic Council (GJC), the government should assess the adverse impact of higher import duty on the jewellery trade and suggested to cut the customs duty to 4 per cent from the current 12.5 per cent.
Pethe said that if the tax rate is not kept at this level, it will encourage smuggling and encourage people to do unorganised business.
In the Budget 2019, the government had increased customs duty on gold. Gold attracted import duty of 10 per cent which the government was hiked to 12.5 per cent. Gold also attracts three per cent GST and the total duty and GST implication work out at 15.5 per cent. The high taxes may result in smuggling and tax evasion.
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Surabh Khandelwal, owner at Dhanvi Diamond, said that the sector expects that the government will take necessary steps in the budget to help businesses affected by the pandemic.
"Today businessmen are expecting a simple and easy taxation system from the government. I hope the government makes the taxation procedure simpler so that it is easy for a common businessman to understand it. In recent times a new tax TCS has been imposed on the jewelry segment, we have already been already under the supervision of 8-10 taxes, and the addition of this new tax will further add to more compliance, more taxes, and more complicated procedure. A time which we should spend in the progress of our business goes in understanding the minute compliance and the taxation system. From budget 2021 we hope that the goverment comes up with more simplified taxation procedures in our sector which can be achieved through a single and simplified taxation policy instead of multiple and complicated taxations," he said.
Vastupal Ranka, director, Rare Jewels from the House Of Ranka Jewellers, said that the gems and jewellery sector is vital for the growth of the economy, "so we expect the budget to be good for our sector".
"When there was a current account deficit, the customs duties on gold and diamonds were greatly increased, due to which the prices in India for gold are higher than our neighbouring countries. I expect the custom duties to be reduced to the minimum," Vastupal said.
Where gold comes through unauthorised channels, he said, "we are also losing a lot of international business".
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"A robust e-commerce policy is also important as that helps reach a global market," he said.
Vastupal also said that GST rates on gold bullion and jewellery need to be reduced from 3 per cent to 1 per cent, as it will lead to more sales in bills, which consequently help businesses across the spectrum of the market.
"We are positive that the government will consider these factors, as they are highly effective in helping the economy bounce back and continue to grow," he said.
The gold and diamond trade together accounts for 7.5 per cent of India's GDP and 14 per cent of the country's total exports.
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