Budget 2020: Jewellery sector seeks reduction in gold customs duty to 6%, polished diamonds to 2.5% to revive industry

Mumbai: Ahead of the Budget, gems and jewellery industry has sought reduction in import duty on gold to 6 percent and on cut and polished diamonds to 2.5 percent to revive the sector.

“The high duty of 12.5 percent on gold coupled with the goods and services tax has made buying jewellery very costly, affecting consumer demand. After the Budget last year, we have met the finance minister several times and we are positive that the government will look into the industry plight and reduce the customs duty to 6 percent,” All India Gem and Jewellery Domestic Council (GJC) Chairman Anantha Padmanaban said.

Saying that liquidity is a major area of concern, he said, the government should take steps to ensure that banks lend to jewellers. “Banks are staying away from lending to jewellers due to recent incidents of fraud and bankruptcy in the sector. This is affecting manufacturing and many units (are) closing down and (resulting in) layoffs,” he added. [caption id=“attachment_4362479” align=“alignleft” width=“380”]  Reuters.[/caption] The GJC, in a presentation, urged the government to waive off bank commission on the use of credit card or reduce it to 0.20 percent from 1-1.5 percent, thus ensuring a boost to ‘Digital India’ and gems and jewellery industry. It also sought relief from Capital Gain Tax, which is keeping customers away from buying jewellery. “We urge the government that in case jewellery sold is reinvested in new jewellery, exemption from Capital Gain as per Section 54F of the Income Tax Act 1961 should be extended to the gems and jewellery industry. This will help the industry to move towards organised and compliant business practices,” Padmanaban added. World Gold Council Managing Director, India, Somasundaram PR said that last year’s import duty hike on gold from 10 per cent to 12.5 per cent needs to be reversed. “Increase in taxes has impeded efforts to make gold an asset class particularly at a time when gold prices have risen globally. The thriving grey market has diluted efforts to reduce cash transactions and penalises organised and compliant players,” he added. The employment potential of the vast, predominantly-handcrafted jewellery industry needs to be augmented through a long term gold policy intervention. “The gold industry should be encouraged to operate transparently and come out of the shadows of a parallel economy, with appropriate infrastructure and standards, underpinned by robust gold spot exchange, bullion banking, innovation and responsible business practices,” he added. The Gem and Jewellery Export Promotion Council (GJEPC) sought reduction in import duty on cut and polished diamonds to 2.5 percent from 7.5 percent and amendment in taxation provisions to allow sale of rough diamonds in Special Notified Zone in Mumbai. The exporter’s body, in its presentation to the government, also urged for introduction of job work policy for gems and jewellery sector. Follow full coverage of Union Budget 2020-21 here